The government has put aside £150m for ‘Help to Build’, a scheme designed to make it easier for people to build their own homes.

The money will go towards funding loans – the borrower will put 5% down as a deposit, the government will provide 20% and the remaining 75% will have to be secured through a self-build mortgage.

This, says specialist lender BuildLoan, is similar to the Help to Buy scheme, expect that the government loan goes to the lender rather than the house builder.

The government hopes that 30,000 to 40,000 extra homes could be added a year through self- and custom-build and that smaller house builders will benefit from this increased activity.

To this end, it has also set up a review, with Richard Bacon leading, to work out how to expand self- and custom-build development and increase the availability of plots of land in England. The review will report at the end of July.

As well as this announcement, the government had announced £2.1m of funds for neighbourhood planning in “under-represented” areas. The aim of this is to give communities greater powers in choosing where new homes, shops and offices are built.

Housing secretary Robert Jenrick says: “Building your own home shouldn’t be the preserve of a small number of people, but a mainstream, realistic and affordable option for people across the country.

“The scheme we have launched today will help the thousands of people who’d like to build their own home but who’ve not yet considered it or previously ruled it out.”

BuildLoan chief executive Raymond Connor adds: “We know there is pent up demand for people wanting to build their own home as evidenced by 55,000 people signed up to local authority Right to Build registers.

“Volume house builders dominate the new build market but this scheme will open up opportunities for SME property developers to expand the custom build sector.

“This announcement demonstrates the government’s commitment to the diversification of housing in the UK by supporting self and custom build.”