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The government鈥檚 affordability targets for new towns could put delivery at risk, according to evidence given to a House of Lords Committee.

New towns, defined by the government as settlements of 10,000 homes or more, form a major part of the government鈥檚 ambition to ramp up housebuilding in the UK.

The government鈥檚 new towns taskforce is set to name around 12 sites for planned new towns this summer. The New Towns Code, which sets out requirements for the schemes, says that the new wave of settlements will aim for 40% affordable housing, with a focus on social rent.

Yesterday (Tuesday), the House of Lords built environment committee heard evidence from property and development sector experts on how the new town policy should be delivered.

Charlotte Neal, director of professional practice and research at Royal Institution of Chartered Surveyors, questioned whether 40% was 鈥渢he right amount of affordable鈥�, adding that supply constraints were making viability 鈥渞eally challenging鈥�.

鈥淲e鈥檝e got material costs, construction cost inflation, and actually, if it then makes a site unviable, you get nothing delivered, whereas if you reduce that affordable amount, then it might make something viable, and therefore you at least get delivery,鈥� she said.

She suggested that a system for offsetting affordability requirements in different parts of the country could be effective.

鈥淚n some areas you could possibly offset where they don鈥檛 need quite so much to somewhere that needs more and try and somehow balance that across,鈥� she added.

Caroline Foster, development director at Urban & Civic, said housing associations specifically would find the target 鈥渄ifficult鈥� to take currently. 

鈥淲e know that 10%, 20%, 25% is do-able under the Homes England loans,鈥� she said. 鈥淚f you start to say it鈥檚 40%, then absolutely it will need additional funding and additional support in a variety of ways.鈥�

Neal added: 鈥淲e need to be careful about getting rather than just putting a blank blanket amount on, really looking at what does make it viable for private sector to get behind, because there are lots of other options, particularly if you鈥檙e a pension fund or an institution investor, where you can deploy capital, and so we have to make this an attractive prospect for them.鈥�

Melanie Leech, chief executive at the British Property Federation, said there was a recognition in the industry that public sector funding would not be available on the same scale as in previous generations of new town development.

However, she also said she did not think the private sector could 鈥渨holly fund鈥� the plans, urging a partnership approach and for the public sector to pick private sector partners 鈥渃arefully鈥�, looking for the 鈥渒inds of investors that have that long-term patient outlook鈥�.

>> Read more: London green belt development could include new towns, Sadiq Khan confirms 

Going through some of the funding options available to the government, she said her 鈥減reference鈥� was that lending for new towns should be 鈥渕ulti-decade鈥� and secured against the land and the buildings so it could be classified as investment in an asset rather than as a loan. 

She also alluded to a report by the Pension Insurance Corporation on 鈥榬egeneration leases鈥�, under which a public sector body gets upfront capital from private sector investors, and repay it over time through the income arising from the homes and the workplaces and so on that are built.

Leech also wondered if there could be an extension of models currently used to fund infrastructure, suggesting the government could 鈥渃reate mechanisms whereby the private sector could be repaid for more than just the infrastructure through some kind of additional Levy, whether that鈥檚 on community assets or whether that鈥檚 on as part of the business rates surcharge or something like that鈥�.

The independent new towns taskforce, which is being led by Sir Michael Lyons and Dame Kate Barker, has been examining proposals for more than 100 sites ahead of its decision this summer.

Earlier this year, housing minister Matthew Pennycook said construction on new towns would begin within the next four years.

The government is expected to set out design principles favouring traditional, Georgian-style homes and winding streets in an effort to create 鈥渨ell-designed, beautiful communities鈥�.