Under details leaked to The Guardian, the new publicly-owned housebuilder would be able to borrow at lower rates than private developers.

Although ministers have been blocked from making any major announcements until the Prime Minister leaves his post, the proposals are expected to appeal to Sir Keir Starmer’s likely successor Andy Burnham.

Burnham has previously called for greater public control over “essentials” such as housing.

Last week, analysis by Savills revealed that the government was falling a long way short of its housebuilding targets.

It forecast that only around half of the government’s target of 300,000 new homes will be completed each year over the next five years.

The estate agency predicts housebuilding completions will average 167,500 per year between now and 2029/30, which is just 56% of the target.

Although broadly in line with the 20-year average for delivery, Savills projects that England is expected to deliver 837,500 new homes in total over the five years to 2029/30.

The most challenging period is expected to come over the next two years as low levels of planning consents and starts to constrain the development pipeline and affordability pressures weigh on demand.

The latest figures show new home completions fell by 4.1% to 190,602 in the year to March 2025, a drop of 10.2% in the two years since the Help to Buy scheme ended.

Savills estimates around 189,000 new homes were built in 2025/26 but expects output to fall sharply over the next two years, to just over 150,000 homes in both 2026/27 and 2027/28.

Savills says development viability is the key challenge.

In the four years to February 2026, build costs rose by 17.5%, while house prices increased by just 4.5%, making it increasingly difficult for schemes to get off the ground.