The scheme has been designed to stoke the private rented sector as well as affordable housing schemes.
Up to £3.5 billion has been made available to each of the PRS and Affordable Housing Guarantees. The balance will be held in reserve to allocate to either scheme depending on demand.
Ministers believe the affordable housing guarantee alone will spur the building of 30,000 new affordable homes to rent - in addition to the 170,000 new homes already being delivered by 2015.
Housing Minister Mark Prisk said: “The Housing Guarantees Schemes are now open for business, with a ground-breaking new offer of low-cost lending to get spades in the ground, create new jobs and deliver thousands of new homes specifically for rent.
“With the government’s backing, investors can now unlock billions of pounds to build high quality homes for private and affordable rent.
“These changes offer a greater choice for new tenants across the country.”
Piers Williamson, chief executive of The Housing Finance Corporation, said: “The Housing Finance Corporation is delighted to be working with the Government to ensure the success of this innovative product.”
The full application process with government will open shortly but several large housing providers are already in early discussions about developments that could be eligible for the scheme.
