First-time buyers will be able to buy a new-build home for 20% less than the market price if the Conservatives win the General Election in May.
Prime Minister David Cameron has said 100,000 new homes will be built on brownfield land in England and they will be made available at the discounted rate to first timers under the age of 40.
Announcing the plans that will help more young people "achieve the dream" of owning their own home, he said certain tax exemptions for developers would help pay for the further extension of the Help to Buy scheme in England.
He added that safeguards would be built into the system to prevent abuse by investors.
"They can't be bought by foreigners, they can't be bought by buy-to-let landlords, they can't be flipped round in a quick sale. They can only be bought by hard working people under the age of 40."
He added: "I want young people who work hard, who do the right thing, to be able to buy a home of their own."
The Chartered Institute of Housing (CIH) has expressed some concern about the plans. Its chief executive Grainia Long said: "We're currently building less than half the number of new homes we need - the result is a housing crisis in which millions of people are being priced out of a decent home. So we welcome the focus on supply and affordability that this scheme represents – but I have lots of questions about how it would work in practice as well as some serious concerns."
Her concerns include the suitability of the land in attracting developers to take risk "on difficult sites as well as the opportunity cost of the tax revenue that would normally be used to boost investment in the local community and build more social and affordable homes".
The attention it deserves
Campbell Robb, chief executive of housing charity Shelter, reacted more positively to the plans: "It's good to see our housing shortage getting the attention it deserves. What's absolutely vital is that the homes built are genuinely affordable for young couples and families on ordinary incomes.
"There's a real concern that removing the requirement on developers to build affordable housing means this policy may not help those facing the greatest struggle to get a home of their own."
However, Shelter was less happy with the Chancellor's announcement that he would cut housing benefit for young people to pay for more apprenticeships while also reducing household's benefit cap from £26,000 to £23,000.
Robb said: "We need a welfare system that's fair, but taking away the safety net that stands between some young people and homelessness would be a disaster."
"Some young people simply don't have the option of living with their parents – like those escaping an abusive household or thrown out because of their sexuality. This part of the safety net is often the only thing that stands between these young people and the streets."