The Housing Revenue Account cap will be lifted for councils in ‘high-demand areas’ and stamp duty will be scrapped for most first-time buyers, chancellor Philip Hammond announced in his Budget speech today.

Mr Hammond said the lifting of the cap would get local authorities building again.

Giving councils the freedom to borrow to invest in housing had been a key ask of the Local Government Association.

He also pledged to provide councils with ‘help and support’ and give local authorities the power to charge a 100% council tax premium on empty properties.

The scrapping of stamp duty will apply to all first-time buyer purchases up to £300,000 and the first £300,000 of the price of properties up to £500,000.

On planning, Mr Hammond opened an urgent review, chaired by Tory policy tsar Oliver Letwin, to understand the ‘significant’ gap between permissions and housing starts.

The review could lead to the Government to using direct intervention compulsory purchase powers to force the bringing forward of land for development.

Mr Hammond said his he wanted to make the ‘dream of home ownership a reality for all generations’ but also help low-income households in areas where rents have been rising fastest, with targeted affordability funding increased by £125m over the next two years to support 140,000 people.

He said the Government would ensure that councils in high-demand areas permitted more homes for local first-time buyers and affordable renters, and ‘kick-start five new locally agreed garden towns in areas of demand pressure’.

In total, Mr Hammond announced that the Government would commit at least £44bn of capital funding, loans and guarantees to support the housing market over the next five years and create the financial incentives necessary to deliver 300,000 net additional homes a year on average by the mid-2020s.

The Housing Infrastructure Fund, which offers funding to local authorities on a competitive basis, will be more than doubled with a £2.7bn cash injection, there will be £400m for estate regeneration and a £1.1bn fund to unlock strategic sites.

Mr Hammond said: ‘Put simply, successive governments over decades, have failed to build enough homes to deliver the home-owning dream that this country has always been proud of.

‘By choosing to build, we send a message to the next generation that getting on the housing ladder is not just a dream of your parents’ past, but a reality for your future.’

As predicted by senior sector insiders, the Homes and Communities Agency will be expanded under its new name of Homes England, which will bring together money, expertise, and planning and compulsory purchase powers.

Mr Hammond said the agency would be given a ‘clear remit to facilitate delivery of sufficient new homes, where they are most needed, to deliver a sustained improvement in affordability’.

And, as part of the Government’s commitment to halving rough sleeping by 2022 and eliminating it by 2027, Mr Hammond announced the establishment of a homelessness taskforce and investment of £28m in three new Housing First Pilots in the West Midlands, Manchester and Liverpool.

In a final flourish, Mr Hammond said: ‘This is our plan to deliver on the pledge we have made to the next generation.

‘That the dream of home ownership will become a reality in this country once again.

‘We do not underestimate the scale of the challenge, but today, we have made a substantial down payment.’