£7 billion to be made available for affordable housing in England, says government

The figure brings together a number of existing funding streams, including an additional £1.4bn allocated by the chancellor as part of the Autumn Statement in November.

The programme has also been expanded to support a wider range of affordable housing tenures, the government has announced. Housing providers will be able to apply for a share of the fund in support of rent to buy schemes, as well as affordable rent and shared ownership schemes, as well as homes for purchase.

Sajid Javid, the communities secretary, said that funding would "allow housing associations to build more homes in places where they are most needed".

"By encouraging the delivery of more homes under a variety of tenures, we can create a housing market which truly works for everyone, meeting the diverse housing needs of this country," he said.

The Shared Ownership and Affordable Housing Programme is overseen by the Homes and Communities Agency (HCA), which is England's housing regulator; and by the Greater London Authority (GLA) in London. The programme covers the period between 2016 and 2021 and there is no set closing date for funding applications.

Housing law expert Lucy Close of Pinsent Masons, the law firm behind Out-Law.com, said that the launch of the fund was "of course, positive news for the housing industry" – but that the expansion of supported affordable housing tenures was the most interesting part of the announcement.

"It may be that the new rent to buy tenure proves more attractive to young people than the previous government's flagship starter homes product," she said.

"One of the key criticisms of starter homes is that you need to save for a deposit in order to buy a property, and this is something which young people currently struggle with whilst they are facing high private sector rents. However, the purpose of rent to buy is to help first time buyers save for a deposit while they rent, as the rent will be set at or below 80% market rent. Therefore, this new tenure may provide the different route to young people who want to get on the housing ladder that the government is striving to achieve," she said.

Close added, however, that 80% below market rent may not be a sufficient discount for a deposit to be saved in London and parts of the south east of England, meaning that it "may not be the answer for all young people".

Rent to buy refers to homes let with rents set at or below 80% of the local market rent for a set time period, giving tenants the opportunity to save for a deposit and then the option to buy their current home. Housing associations and local authorities will be able to bid for a share of the funding to support the construction of this type of property.

The programme also supports the construction of shared ownership homes either by public or private providers, which can provide a route into home ownership for those struggling with affordability. Local authority and housing association homes for affordable rent will also be supported, in recognition of the fact that many of those who rent from the private sector need support to be able to afford market rents.

The first housing providers to successfully be allocated a share of the funding pot following the opening bidding round for the scheme have also been announced by the government, meaning that work on the delivery of those properties will be able to get underway shortly.