A Labour government run by Jeremy Corbyn would borrow £15bn a year to build houses across the country – half of them council homes – as part of a £500bn programme of public investment, new policy papers have revealed.

It would aim to build one million homes during a five-year parliament and guarantee housing tenants – especially those in the private sector – new safeguards, including secure three-year contracts and protection from “unreasonable rent increases”.

Despite the huge sums, Corbyn’s team insists that government borrowing will be “highly efficient” and a good deal for taxpayers because of the boost to the economy from construction, job creation and rental income.

The documents, released by the Corbyn campaign as it seeks to fend off the challenge to his leadership by Owen Smith, say that the net cost to the public sector will be £10bn a year, because two thirds of the construction bill would be labour costs, meaning extra tax revenues for the Treasury.

The papers say that, with “government borrowing rates the lowest ever, this is the most cost-effective way possible to meet Britain’s housing needs. Since the government will be acquiring assets, the taxpayer can expect to make a net gain as rents are paid on the new housing.”

Corbyn’s team said its figures and plans were more credible and precise than the house-building agenda offered by Smith, who had merely said he would “free up councils across the country to borrow to build”.

Yesterday Smith set out plans to scrap university tuition fees and called for the current funding system to be replaced with a 1%-2% graduate tax. He also pledged to build 50,000 homes a year for would-be first-time buyers aged under 30, to be rented at lower than market rent.