Funding for 10,000 social housing units a year by 2007/08 is part of a housing budget for England of £1.3bn a year announced by Chancellor Gordon Brown in the spending review this week.
The news has been welcomed by brokers who say the move will help first-time buyers and lead to a wave of innovative products aimed at key workers.
The England housing budget is to rise by 4.1 per cent from £5.9bn this year to £7.2bn by 2007/08.
Chadney Bulgin partner David Thomas says the increased funding will help first-time buyers pushed out of the market by buy-to-let investors. He says social housing is an excellent way to help people who are struggling to get a foot on the property ladder.
London & Country broker David Hollingworth says increasing the supply of social housing, especially in the South-east, is a big step towards solving supply problems.
However, Hollingworth says it remains to be seen how the new stock will be split between being available for rent, to buy or shared ownership.
Park Row Mortgages managing director Kevin Paterson says: “I expect to see more innovative products for first-time buyers and key workers, which is a sector of the market that more lenders need to enter. Social housing will be a big growth area.”