Under the NewBuy scheme major lenders including Barclays, Nationwide and Natwest will allow people to borrow up to 95 per cent of the value of a home, with the sum guaranteed by the government and building firms.
The scheme is only available on purchases from major housebuilders who will provide a deposit of 3.5 per cent of the property's value. The government will provide an additional guarantee of 5.5 per cent in an attempt to .
Jonathan Samuels, CEO, Dragonfly Property Finance is sceptical about the scheme: "If the Government thinks this scheme will kickstart the property market then it is in Cloud Cuckoo Land. The concern is that NewBuy is intrinsically leveraged, and we know where leveraging got us in the past. People should buy when they are genuinely in a robust position to do so, not because a bank says they can buy.
The government has also announced an extension of the right-to-buy scheme for council housing. Tenants will be eligible for a £75,000 discount on the price of the house.
David Cameron commented: "Strong families and stable communities are built from good homes. That's why I want us to build more homes and I want more people to have the chance to own their own home."
"We're rebooting the right-to-buy scheme to increase discounts for two million tenants in social housing in England. And we're delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly built home," he added.