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The scheme, called NewBuy, is available on flats and houses up to a maximum value of £500,000 in England and will enable people to borrow up to 95% of the value of new homes.

 

Under the scheme the construction industry and taxpayers will act as co-guarantors on new homes bought by existing or first-time buyers.

 

The government says the scheme will enable people to buy a house with a 5% deposit, meaning buyers might only have to provide a £10,000 deposit on a newly built £200,000 home.

 

Critics argue the scheme is just a ruse to help the construction industry.

 

NewBuy is backed by the Home Builders' Federation (HBF) and the Council of Mortgage Lenders. Names are being released later of three High Street lenders and seven construction firms who are supporting the scheme.

The construction industry hopes the plan will lead to an extra 100,000 properties being built, which it says would create 500,000 jobs.

The scheme aims to deliver on the promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly built home.

 

One of Britain's biggest housebuilders, Barratt Homes, said 20,000 people had already registered for more information about the scheme.