Conservative MPs are calling on the housing secretary, Michael Gove, to hand greater decision-making powers over new housing to local people in an attempt to boost acceptance of new developments.

Steve Baker and Greg Smith, Tory MPs in house-price hotspots in Buckinghamshire, are backing a plan to strip councils of decision-making powers over some new developments and incentivise residents instead to approve new schemes.

The proposal to extend localism comes as Gove and his advisers rethink government planning reforms, which ran into angry opposition in the Tory shires because they reduced local participation in planning and gave developers a freer hand.

Baker and Smith are backing an idea floated by the Social Market Foundation thinktank to allow residents of streets or villages to vote on whether to accept additional development in their close vicinity. The theory is that they are more likely to support allowing more extensions or new homes on underused sites if they stand to benefit themselves from the planning consents.

“It is clear that we cannot continue with our current planning system,” said Baker. “Costs and disbenefits are imposed on individuals without adequate inclusion in the process or adequate compensation being provided. We need to give the public the opportunity to say ‘no’ to planning proposals, but the incentives to say ‘yes’ because they see the gains for their community.”

The government has said 300,000 new homes need to be built each year to meet demand. In the last 12 months for which data is available – up to the end of June 2021 – 183,450 were built in England.

The report, written by John Myers, who runs the YIMBY Alliance (yes in my back yard) campaign, suggests villagers “should have more power to allow high-quality, attractive development next to the village when they see benefits for the community”.

“In towns or cities, residents of a stretch of street should have the right to conduct a street vote to set out the rules for new extensions or more ambitious development,” Myers writes. “A mews vote could similarly allow residents of houses surrounding a stretch of waste ground to give permissions to add new mews cottages.”

Greg Smith, the MP for Buckingham, said: “Planning in the UK is broken. Driving through our villages, signs proclaiming ‘no to xxx houses’ or ‘no new development here’ are commonplace – and politicians ignore that at our peril. This new paper proposes a fundamentally good principle of genuine localism and people power.”