Osborne also re-confirmed plans first revealed at the weekend to extend the Help to Buy equity loan scheme until 2020, with 120,000 homes expected to be built over the course of the scheme’s life.

In his Budget statement the Chancellor pledged £0.5bn to fund to help small building firms alongside £150m for those who wish to build their own houses.

“House building is up 23% but that’s not enough,” he said. “That’s why we’re making further reforms to our planning system and offering £0.5bn of finance to small house building firms.

“We are signing city deals across the country to get more built, with a new funding deal this week for Cambridge. We are giving people a new right to build their own homes, providing £150m of finance today to support that.

“We are funding regeneration of some of the worst conditioned housing estates we have in this country.”

Osborne’s plans to create a garden city in Ebbsfleet, Kent will be joined by other developments in the London areas of Barking and Brent Cross.

Responding to criticisms from the Labour party that the Ebbsfleet plans had already been announced under the last government, Osborne said those plans had led to fewer than 300 homes being built.

The Chancellor also announced further changes to stamp duty for those buying through a company with all properties valued at over £500,000 hit with a 15% tax rate from midnight tonight.

John Penn, head of mortgage proposition at Intelliflo, welcomed George Osborne’s commitment to increasing housing supply.

“The Chancellor’s announcement to increase housing supply is a much needed step for the recovery of the economy. While this weekend’s decision to extend Help to Buy is good news for the mortgage market, the resulting increase in demand for property is pushing up prices. Help to Buy has boosted consumer confidence and, as a result, the housing market has been revived.

“However, housing supply is failing to meet this new demand. This is particularly true for London and the South East, where property prices have soared exponentially because of the housing shortage. Property ownership is unaffordable for an increasing number of people.

“A fundamental element to help solve this issue is to build more houses, and the Chancellor’s announcement today will go some way towards addressing that.”

Toby Ryland, corporate tax partner, said foreign buyers would no longer benefit from a tax loophole.

“Few will shed tears for the wealthy foreign buyers of British property who could suddenly face a 15% rate of stamp duty.

“But the Chancellor’s decision to close this tax loophole is more about levelling the playing field than boosting the tax take. Foreign buyers will no longer enjoy big tax advantages if they buy through a company rather than as an individual.

“Don’t expect the overheating London property market to miss a beat, but these new measures may encourage developers to sell more properties to UK buyers rather than overseas investors.”

For full coverage of the Budget 2014, click here.