Shapps plans to introduce a new homes bonus that will give councils cash incentives for every new home they allow to be built. The extra payment will match the council tax raised on new homes over six years.

Signaling the dire local authority cuts to come, Shapps said the payments to councils would provide a new means of balancing the books in order to maintain services after Government spending cuts.

“The new homes bonus will be compensation for new homes being built,” Shapps told house builders at the Housing Market Intelligence conference in London.

“I need your help in selling that to local authorities who haven’t quite got the implication. Local authorities will take their share of the cuts in the spending review.

“You should take that to your advantage and go to the local authorities and tell them that this is a powerful incentive. When the councils find they are being squeezed, they will find that the new homes bonus will help.”

No more information was available on the new homes bonus but a typical band E property would generate council tax payments of around £1,500 for each home built.

Shapps said a lengthy period of house price stability was needed.

“I have a single ambition: that house prices regain a form of stability. We need a housing market that is boring and things are predictable. Buying a home shouldn’t be like playing the lottery.”