Thousands of new high-quality homes, including social and affordable, will be designed and built by local people for local people, the government says.

According to housing minister Matthew Pennycook, a new £20 million package for community groups, such as community land trusts and housing co-operatives, will directly support the construction of more than 2,500 new homes over the next decade.

According to the government, community-led housing is about placing power into the hands of local people who will take the lead in the design and location of new homes, with community groups being able to access land and receive planning permission where speculative developments cannot.

Matthew Pennycook said: “Community-led housing not only delivers social and affordable homes for local people, it also gives local communities a greater say on where new homes are built and how they are designed.

“This investment will help community-based organisations overcome barriers to housing delivery and will support the growth of the community-led housing sector.

“Through our Plan for Change we are boosting housing supply and reforming the housing system, delivering on our commitment to the biggest increase in social and affordable housebuilding in a generation.”

The government says that community-led housing sector is grossly under-developed in the UK compared to other countries in Europe, resulting in a significant loss of potential social and affordable housing as well as depriving communities of the high-quality housing they want.

The government is investing the £20m in a social finance fund, which will be led by Resonance.

According to the government, the investment will be used to attract up to £30m in match-funding from the private sector, as well as local authorities and combined mayoral authorities.

Jon Rolls, Head of Developing Communities at Resonance, said: “This is a landmark moment for our fund and for the community-led housing movement. MHCLG’s investment will act as a vital catalyst, unlocking more support for communities determined to shape their own futures. It’s simple – when communities are in the driving seat, brilliant things happen.”

The Chief Executive at the Community Land Trust Network, Tom Chance, said: “This investment will be welcomed by hundreds of communities working to build thousands of much-needed homes, from tourist hotspots where local are priced out to city neighbourhoods blighted by a lack of investment. Community-led development offers local people a tool to be builders rather than blockers.”