There is to be a new consultation by the Government, aimed at ensuring that Starter Homes cannot be bought by buy-to-let investors.

Some 200,000 Starter Homes will be built on brownfield sites at a 20% discount available only to first-time buyers.

However, a current loophole in the Housing and Planning Bill does not specify that the purchaser must actually live in the Starter Home.

According to the Lib Dems, who identified the loophole, wealthy parents could give their children lump sums to buy Starter Homes, which could then be let out.

There would also be nothing to stop a first-time buyer doing a deal with an investor.

Party leader Tim Farron said: “The Government’s plans for Starter Homes are very badly designed and will fail to help the right people. They will be snapped up by the sons of millionaires and make them a huge profit.”

A spokesperson for the Department of Communities and Local Government said: “We are clear Starter Homes will not be buy-to-let properties and will be consulting shortly on rules to include letting restrictions.”

It is not clear whether the consultation will only cover the first purchase of a Starter Home, or any subsequent discounted purchase. The rules allow for Starter Homes to be resold or let at their open market value five years after the initial sale.