Under the plans – part of a scheme aimed at tackling the shortage of affordable homes and the number of people unable to obtain mortgages – the Government would underwrite part of the risk involved in borrowing up to 95 per cent of a property’s value.

There are already a number of these schemes lined up and ready to go, ministerial sources revealed, but they have been hampered by lack of finance. Today, the Government said that it would be establishing a £400 million fund to help these schemes get off the ground.

The Government also wants to support “shovel-ready” building projects that have been shelved due to funding issues in order to get more properties built and free up the housing market. The “Get Britain Building Fund” starts in July next year, and will involve property developers competing for state funding to pursue projects which meet the right criteria – such as the commitment to create more affordable housing across the UK. Ministers are hoping that the initiative will eventually lead to the creation of 16,000 new properties and some 32,000 building, engineering and design jobs.

Announcing the plans today, government ministers declared that they would help to “unstick” the mortgage and property markets, although the Labour opposition insisted that the scheme was “rather small beer” and would not make a great deal of difference.

By 2015, the Government wants 450,000 new homes built, with most of those considered “affordable”, although it is relying on the market and has not set any official targets. It would also like many of the new homes to be built on publicly-owned brownfield sites.

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