The National Housing Federation (NHF) has proposed a ‘Buy as you go’ scheme in which people would make a monthly payment, which would be part rent and part acquisition of the property.

The scheme would help the 1.4m people that it has identified as not being served by current housing options.

It said the monthly payments would be roughly 90% of the market rate in their local authority area and, with equity building up from day one, could mean people using the scheme would own their home outright after 25 years.

The NHF said in a statement: “Many aspire to own their home but are currently living in the private rented sector on salaries below the national average. They struggle to borrow money via a mortgage due to insecure work. They are not able to access social or affordable housing or afford share ownership or starter homes, and 40% of them are families with children.

“With flexible funding, housing associations could deliver a new home ownership product at a scale for them that: would not require a deposit, would allow people to start building equity from day one and would involve lower monthly payments than market rent.”

The NHF said it wants to develop a product that, with government support, can be scaled up into a national offer.

“We would welcome the opportunity to bring organisations leading this innovative work together with the government to discuss how these may be delivered,” said the NHF. “This would also provide an opportunity to discuss how the current Rent to Buy product could be improved to help more people into home ownership.”