The Government has finalised an overhaul of the Right to Buy scheme which could see tenants benefit from discounts of up to £75,000.

The announcement was made on the same day as ministers launched the NewBuy Guarantee, a mortgage assistance scheme intended to help first time buyers.

Housing Minister Grant Shapps said the changes to the Right to Buy were designed to reverse a decline in sales from 84,000 less than ten years ago to just 3,700 last year.

Current Right to Buy discounts range from £16,000 in most parts of London to £38,000 in parts of the South East. The new £75,000 limit will – subject to Parliamentary approval – apply from April.

Shapps insisted that the new scheme would not lead to a reduction in the number of affordable homes. Key elements include:

• Councils will be able to reach a deal with the Government, allowing them to use the receipts from sales to build new affordable homes in their area;
• The replacement of additional homes bought through the Right to Buy will be funded through the same model as the Affordable Homes programme. This allows social landlords to meet the costs of new homes “from borrowing against the future rental income, contributing from their own resources, including land, and grant funding from the Government”. Receipts will substitute for grant funding for up to 30% of total costs;
• If receipts are not used locally, they will be handed to the Homes and Communities Agency and the Greater London Authority for re-investment in affordable housing;
• Tenants will have to have been public sector tenants for five years or more before being eligible.

The Housing Minister said: "We're scrapping the miserly restrictions on the level of discounts under Right to Buy – great news for thousands of tenants who have done well for themselves and want to buy the home they live in.

"But we are determined to maintain the number of affordable homes for rent – so for the first time, homes that are sold will be replaced by new affordable homes, helping councils meet housing need and getting the nation building again."

Final details of the Right to Buy scheme can be viewed here.

According to Government estimates, the NewBuy Guarantee could meanwhile help up to 100,000 people buy their own homes.

The scheme, which is backed by three high street lenders and seven building companies, will offer mortgages on newly-built properties to people with just a 5% deposit.

The Government and the participating housebuilders will provide security for the loan, allowing the lender to recover its loss should the house be sold for less than the outstanding mortgage total.

The eligibility criteria include requirements that the price of the property must be valued at less than £500,000 and that the purchase must be a standard one (rather than shared equity or shared ownership).

Ministers claim the scheme will also support 50,000 jobs in construction and related industries by increasing demand.

Prime Minister David Cameron said: “We're re-booting the right to buy scheme to increase discounts for two million tenants in social housing in England. And we're delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly-built home.

"It's no good hoping people will climb the property ladder if the bottom rung is missing. Affordable properties and available mortgages are vital.”