The Government should create a new housing fund to deliver at least 40,000 new homes annually, an independent think tank proposes.

A National Housing Fund, shared 50-50 by Whitehall and a number of housing associations, would increase the supply of new homes around the country and boost public finances by £3.4bn, says ResPublica.

In their new report - A National Housing Fund to build the homes we need - the think tank argues £100bn of repayable investment, delivered through the fund, over a decade could transform the country’s housing offer.

As well as a boost to the housing stock and public finances, ResPublic, along with housing management consultancy PCA, projects the fund could create 180,000 new jobs in the construction sector and support the growth of small and medium sized builders.

The housing associations and Whitehall will each hold a 50% stake in the National Housing Fund. The associations will manage the properties and the Government will provide the funding through the raising of government bonds and on lending this to the fund.

The rental income of the fund will meet the cost of the Government’s interest payments until the loan is repaid and the net rental income will generate surpluses that can be reinvested into building more homes.

House building over the last 35 years has averaged 150,000 homes against the Government’s target of 200,000 - a target that is consistently missed.

‘Government has confirmed that we have a broken housing market and we now have a strong political consensus to build more rented homes,’ said managing director of PCA and report author, Philip Callan.

‘Historically low borrowing costs can provide the mechanism to deliver the homes we need.

‘Our report focuses on the practical steps that government can take to deliver many more homes. All of our proposed actions are in their control. What is needed now is the political will and leadership to make it happen.’

Commenting on the report, director of ResPublica and the other report author, Phillip Blond, said: ‘Our National Housing Fund offers the Government a way to finally build the homes it acknowledges it needs.

‘Through the notion of a guaranteed buyer we reinvent the only formula that has ever enabled the state to build at scale.

‘Crucially this idea will dramatically expand the capacity of two relatively dormant sectors, the SME building market and Housing Associations, such that they too can build at scale and open up the market for the millions who need it to work for them.’

Lord Kerslake, former permanent secretary at the department for communities and local government, said: ‘This is a big and ambitious proposal that alongside other measures, would have a material impact on the supply of new housing.

‘It deserves serious consideration by government and the sector.’