The fund was first announced by the coalition government in 2014.
The first Starter Homes with a 20% discount will be built this year after nearly three years of silence about the scheme.
The government has identified 30 areas across England that will receive £1.2bn of funding from the ‘Starter Homes Land Fund’ for new developments on brownfield sites – based on their potential to deliver homes fast.
The fund was first announced by the coalition government in 2014.
In order to qualify buyers must be aged between 23 and 40, while the discount will apply below £250,000 outside London and £450,000 in the capital.
David Hollingworth, director of communications at London & Country, said: “It’s hit some good notes by targeting first-time buyers.
“It’s designed to help the affordability issue because of the 20% discount but it’s helping to develop supply on sites that were previously unreliable.
“It’s a case of what numbers it will deliver and how quickly however it’s positive that it will focus on speed of delivery as well as quantity.
“If you don’t try this stuff you can’t see what the benefits are.
“I guess with the maximum cap on purchase price and age limits the government is focusing on what it sees as the target market.”
John Healey, Labour's shadow housing secretary, called Starter Homes a symbol of the Conservative record on housing.
He said: "Ministers launched them in 2014 but will only start to build the first in 2017, promised they'd be affordable for young people when they'll cost up to £450,000, and pledged to build 200,000 by 2020 but no-one now believes that's possible."
And Roger Harding, Shelter’s director of communications, said homes worth up to £450,000 shouldn't be labelled as affordable.
He said: “Efforts to build more homes are welcome, but these Starter Homes are only likely to benefit people who are better off and already close to buying.
“The government recently signalled that it wanted affordable to start to actually mean affordable when it comes to building homes.
“We would urge them to keep to this rather than continuing with Starter Homes, which have been shown not to work.”
Mark Hayward, managing director of the National Association of Estate Agents, was cynical about the announcement.
He said: “The government has made promise after promise and pledge after pledge to help FTBs get on to the housing ladder, but until we see these houses built we won’t hold our breath.”
