The government has spent £250m to boost starter home construction without a single property being built so far, it has emerged.

Dominic Raab, the housing minister, made the admission in response to a question from John Healey, the shadow housing secretary, who described the situation as “a betrayal of young Brits looking for help to buy a first home”.

In March 2016 the government announced a £1.2bn fund to help deliver “200,000 quality starter homes by 2020 exclusively for first-time buyers at a 20% discount on market value”. The promise was originally made in the Conservatives’ 2015 election manifesto.

The aim was to use the cash to support the purchase and cleanup of sites to guarantee the construction of starter homes. The policy recognised that the cost of making brownfield sites useable could make some places unviable for development. Ministers believed that targeted interventions could help increase housebuilding at the bottom of the market where the affordability crisis had bitten most deeply and particularly affected millennials.

In January 2017, Gavin Barwell, then housing minister, , said the first homes would be built that year after partnership agreements with 30 local authorities.

He said: “This first wave of partnerships shows the strong local interest to build thousands of starter homes on hundreds of brownfield sites in the coming years. One in three councils has expressed an interest to work with us so far.”

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However, after Raab confirmed that “£250m of the starter homes land fund has been spent to date”, a spokesman for his department said, adding: “At the moment no specific starter homes have been built yet.”

The government has now placed the operation of the flagship fund under review.

A spokesperson for the Ministry of Housing, Communities and Local Governmen, said: “We have spent £250m buying land to build affordable properties, and work is underway getting them ready for development. It is important we get starter homes right and we aim to introduce regulations on them alongside our new planning policy before building gets underway.”

Quick guide What is a community land trust? Show Hide What is a community land trust? It’s a not-for-profit organisation run by local residents that develops genuinely affordable housing. Where does the idea come from? It originates from India where, under the gramdan system, villagers can choose to hold their land as a collective. It was then exported to America and from there to the UK. Is it typically a rural thing? Often, yes, because land in cities is so expensive. But some of the most interesting schemes in Britain today are in cities. In north London, the StART community land trust proposes to take over a big chunk of a hospital site and build 800 genuinely affordable homes. It’s a serious proposal, as even the politicians accept. The trouble is, they need hundreds of millions to buy the land. Photograph: Mark Waugh

Healey said: “There are now a million fewer home owners under 45 than in 2010 but the Tories are doing too little to give working people on ordinary incomes a hand up. Ministers should get a grip and back Labour’s plan to help first-time buyers with first dibs on new homes for local people.”

Research published this week by the Resolution Foundation showed that home ownership among 25- to 34-year-olds had plummeted across the UK in the last three decades. In Greater Manchester it fell from 53% in 1984 to 26% last year; in the West Midlands from 45% to 20% ; in Wales from 50% to 28%; and in the south-east from 55% to 27%.