There are still many unknowns surrounding how these products will interact. Future land values will depend on the mix of tenures on site. Here are some issues which will impact on appraisals:

■ Affordable Housing requirements: one of the biggest factors affecting land value is the amount of Affordable Housing that the local planning authority will require the developer to deliver alongside open market homes and Starter Homes.

■ Risk and viability: another consideration is how the broadening of shared ownership provision could impact on viability. The level of risk to the developer, and consequently the profit margins required, depends on whether shared ownership units are sold in bulk to a housing association or the developer undertakes the sales themselves. The latter route carries greater risk.

■ Starter homes: while developers can secure their cash flow by selling shared ownership units in bulk early to a housing association, this is unlikely to happen with Starter Homes. As a consequence, land allocated to Starter Homes may return a lower value than sites allocated for shared ownership. This potentially opens up wider questions around how promotion and development of large sites are funded.

■ Securing a cash flow: if a developer decides to retain control of all sales on a site, whether Starter Homes, Help to Buy or shared ownership, they would not secure the cash flow that they can currently receive through the sale of Affordable Housing to a housing association. Housebuilders and developers may be increasingly willing to forward sell units at a discount to institutional PRS investors as one of the few options left to them in securing early cash flow.

■ Private developers that retain control of shared ownership may also consider selling the income stream, something housing associations have rarely done, creating a larger market for this form of investment.

■ Higher value markets: the graph assumes that Starter Homes will achieve 80% of market value. But 20% is the minimum discount and, across high value markets in the south of the country, the maximum value caps (£450k in London, £250k everywhere else) will have a much greater impact. In these high value markets, the discount will need to be much higher to get below these caps and it is possible that Starter Homes may generate no more land value than that of traditional affordable tenures.

All of this will have a profound effect on viability testing, not only of development schemes but also of Local Plans, including the policy level of Affordable Housing requirement and CIL. This adds to the burden on local authorities, who may want to amend their plans, and may derail plans that are currently on target to be adopted before the Government’s 2017 deadline.

Such a review would need to balance the Westminster requirement to provide Starter Homes with the duty to house people in need, at the same time as ensuring development can take place on a financially viable basis.

^{Source: Savills Research}