Homeowners fear their £500,000 houses could halve in value as developers plan to sell unwanted properties as social housing.

Properties on the Dean's Lea estate, in the Cotswold village of Bishop's Cleeve, near Cheltenham, were at a premium when they went on the market earlier this year.

But Bovis Homes has been unable to sell dozens of one- and two-bedroom houses because first-time buyers and buy-to-let investors have dropped out the market.

So it is negotiating with housing associations to sell them at a knock-down price.

But homeowners are outraged that nearly half the development could be filled with "council" tenants.

Barbara Luck, 60, paid £535,000 for her five-bedroom home a few months ago and fears its value will halve if it is surrounded by social housing and was looking forward to a "rosy" retirement. She said: "It's outrageous. It was supposed to be an exclusive development with only a small proportion sold for social housing. "Now it looks like half of them will be turned into council houses because they can't sell them all.

"I'm furious. I was looking forward to my retirement and having a rosy future here."

She said Bovis should stick to the previous plan, even if it is struggling to find buyers. She said: "If this goes ahead it's a total breach of contract and complete misrepresentation at the point of sale. They can't just change their minds on something like this.

"I'm devastated. I understand there's a credit crunch at the moment, but this is a temporary slowdown for Bovis, whereas the consequences will be permanent for those of us already here."

Dean's Lea estate opened in the Cotswold village of Bishop's Cleeve earlier this year.

There are 165 homes on Dean's Lea the site, with 44 allocated for social housing to meet Government guidelines on new developments.

The first houses on the site were sold a few months ago, ranging from more than £500,000 for a five-bedroom house to £159,950 for an apartment. But sales slumped as the economic slowdown set in.

Bovis Homes has turned to private investors and housing associations, such as Rooftop Housing Group, to sell the remaining 36 properties.

Bovis said they, like housebuilders across the UK ,were turning to such schemes to off-load properties they could not sell.

David Hannon, development director at Rooftop Housing Group, said: "Across the country private developers are having discussion with housing associations about how they can work together to alleviate the current housing crisis and any talks between Rooftop and Bovis should be considered in that light."

Writing on a website comments page, Anne, who lives in Copeland Park, Gloucester, said: "I am a resident in another Bovis development in Tuffley and Bovis have also sold a lot of properties to Rooftop Housing Association on this estate.

"When this first came to light a number of residents were up in arms and petitioned to stop it happening.

"The upshot is nothing happened and the residents moved in. To date, as far as I am aware, there have been no issues with any of my neighbours and all is good. Everyone of the residents around me go to work and I have yet to see a sofa on the front lawn. They all appear to be decent hard-working people."