Kris Hopkins, the housing minister, said: “By selling off council houses worth
millions of pounds, councils can use the money to buy or build more new
affordable homes in their borough and cut housing waiting lists. London
boroughs like Southwark have shown how this common sense measure will
increase affordable housing in London.”

He added: “Housebuilding is an essential part of this government’s long-term
economic plan. That’s why we have designed an ambitious new scheme to build
affordable homes at the fastest rate for 20 years.”

From Monday councils, housing associations and developers will be able to bid
for funding from a new scheme to encourage the building of affordable homes
across Britain.

The Department for Communities and Local Government (DCLG) says the initiative
will see 165,000 new affordable homes built over three years from 2015.

Mr Hopkins said the scheme, which including private investment will be worth
£23 billion, forms an “essential part” of the Government’s long-term
economic plan. It is expected to result in one job opportunity for every
home built.

As part of the scheme councils and housing associations – known as “social
landlords” – will be subjected to a new requirement to prove that they have
considered whether their “very vaulable” homes should be sold off when they
are vacated, with the money used to provide more families with “decent,
affordable accommodation”.

“Some social landlords own very valuable homes in the most expensive parts of
towns and cities, and they will need to demonstrate that they are using
their property portfolio in the most effective way possible,” DCLG said.

The new guidelines come after the disclosure of a number of instances where
houses valued at more than £1 million were let to social tenants while many
people are struggling to get on the property ladder.

A study published by the Policy Exchange think tank in 2012 found that in the
South East alone almost 100,000 council homes were worth more than the
average privately-owned property. It estimated that selling social housing
in expensive areas could raise at least £4.5 billion a year.

However, critics have warned that such a move would lead to “social
cleansing”, with low-paid workers gradually moved out of more expensive
areas.