A new report by the communities & local government committee criticised the funding model for the right-to-buy scheme, which will see housing associations in England reimbursed for selling homes to tenants at discounts.

Under the voluntary scheme, which is currently being piloted in five areas, housing associations will be expected to sell properties to tenants interested in buying them at a discount of £103,900 in London and £77,900 outside the capital.

Ministers say it will help create a million new homeowners by 2020.

MPs said it should be paid for directly rather than via council house sales and called on the government to set out the fully costed evidence for the proposals.

The committee report also raises concerns that the UK government’s housing policies could have a “detrimental effect” on the provision of affordable housing and that the provision of social housing in rural areas needs to be addressed in order to protect rural communities.

Clive Betts MP, chair of the communities and local government committee, said: “The fundamental success of this policy will depends not just on whether more tenants come to own their home but on whether more homes are built. As a committee, we are concerned that there are a number of unresolved issues with the Government’s policy which could have a detrimental effect on the provision of accessible and affordable housing, particularly affordable rented property.

“The governments needs to set out in more detail on how it will meet its target of at least one-for-one replacement of the sold homes, particularly given issues such as the availability of land, the capacity of the building industry and the uncertainty of income from council home sales.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, which gave evidence to the committee’s inquiry, said: “We would urge ministers to consider this report very carefully. Our research shows that almost 7,000 council homes a year could be lost when right to buy is extended to housing associations if no extra funding is provided by central government. Such a significant loss of desperately-needed affordable homes would mean more people on lower incomes stuck on council waiting lists all over England – and for generations to come.

“Many people aspire to buy a home – and no-one is saying the government shouldn’t support that – but as the committee points out, we cannot forget people who simply cannot afford to buy, even with extra support. We need to make sure we are providing a range of housing for all, including more homes at rents that are truly affordable. We fear that some of the government’s proposed policies will make that more difficult.”

She added: “We agree with the committee’s recommendation that the government should review the suggested income thresholds for its proposed ‘pay to stay’ policy. You cannot class a household with an income of £30,000 as ‘high income’. A single person with no children might seem relatively well off, but what about a couple who both earn £15,000 and have three children?”

TPAS chief executive, Jenny Osbourne, said the government should revise its proposals for reform of social housing to ensure that secure rented homes are available to households in years to come.

Mrs Osbourne said: “Many social tenants are worried that policies in the housing and planning bill will reduce the number of social homes available in future, at a time when need for such properties remains high. It is helpful to have a high profile committee echo the views of tenants, and we call on government to rethink its approach.”

She added: “It is essential that policy makers and landlords understand the impact of the right to buy on future communities as well as current households. TPAS would support restrictions being placed on RTB sales to prevent homes moving into the private rented sector.”

Giving evidence to the select committee in October, Mrs Osbourne illustrated how tenants on low incomes could be affected by Pay to Stay.

Today she said: “If anything, tenants have got more worried about pay to stay since the committee heard our evidence. We endorse the committee’s recommendation that thresholds for this policy should be reviewed and hope the local discretion around implementation can be extended to councils.”

The SNP has described the UK government’s housing policies as a “further drain” on social housing stock – in complete contrast to the Scottish Government’s approach north of the border.

Alison Thewliss MP, who is a member of the Communities and Local Government committee, said: “The SNP wants everyone to have a safe, warm and affordable home – it is a fundamental to our wellbeing and also central to how Scotland can become a fairer and more prosperous country.

“By scrapping the Right to Buy scheme, the SNP in Government will ensure that 15,500 homes will remain in the social sector over the next decade which is in sharp contrast to the Tories proposals to sell off thousands more social homes – further draining the social housing stock in England.

“The Scottish Government is on track to meet its housing targets with 30,000 affordable homes built by March 2016, with 20,000 of those for social rent. If the SNP are re-elected next May, the target will be even higher with at least 50,000 new affordable homes built in the next parliament, a commitment worth more than £3 billion.”

The Department for Communities and Local Government said more details about the sale of vacant council houses would be set out in due course but the principle of using them to pay for new house building was the right one.

“There are billions of pounds locked up in local authority housing assets. It is only right that when they become vacant they are sold enabling the receipts to be reinvested in building new homes and supporting home ownership through right-to-buy,” a spokesman said.

He added: “Anybody who works hard and aspires to own their own home should have the opportunity to realise their dream.”