The £1.4bn of affordable homes cash is additional to the £4.7bn previously announced, with the restrictions limiting that funding to homeownership products lifted.

The government had trailed its plans to provide £1.4bn of cash for 40,000 new affordable homes of multiple tenures, including rent, before the Autumn Statement.

But detailed documents published alongside the Statement reveal the relaxed restrictions on funding will apply to the current Affordable Housing Programme, while the £1.4bn is new cash.

This follows concerted lobbying since the EU referendum by the housing sector, with the National Housing Federation making an unprecedented pledge to deliver more homes if the government relaxed restrictions.

However, modelling by the Office for Budget Responsibility said this would likely reduce building by housing associations by 13,000 over the forecast period, “a boost next year becoming a drag by 2019/20”.

This will allow housing providers to build affordable rented homes and homes for low cost ownership “to meet the housing needs of people in different circumstances and at different stages of their lives”, the document said.

The government announced a National Productivity Investment Programme, which will include an extra £1.4bn to deliver 40,000 housing starts by 2020-21.