People carrying out home renovations will gain greater protections against "cowboy builders" through a new database of trusted traders and a payment system offering more safeguards, the government has said.

Traders signing up to the scheme launching next month will need to demonstrate certain standards of customer service, transparency and dispute resolution.

Prime Minister Andy Burnham said unscrupulous tradespeople "leave families with months of stress" as well as unfinished work.

The National Federation of Builders said the changes would not stop rogue operators while the Tories suggested there would be added paperwork for firms already operating legitimately.

Citizens Advice has said home renovations are one of its biggest sources of consumer complaints.

The government said more than a quarter of people who carried out home improvements in the past 18 months have experienced problems, such as builders disappearing after upfront payments were made.

It cited a survey carried out for the Competition and Markets Authority, external suggesting customers lost more £10bn in 2024 on home and garden maintenance services due to losses, overpriced costs or unfair practices by traders.

BBC News has previously reported on "bait-and-switch" locksmith scams, where customers were given an initial cheap quote before hidden charges and unnecessary work were added.

Under the new traders' scheme, customers' money will be held in an account and released in parts after certain milestones in projects are completed.

The National Federation of Builders (NFB) told BBC Breakfast there are already schemes in place to find trustworthy builders.

Adas Rico Wojtulewicz-Richmond, the NFB's director of policy, said: "Is this scheme going to stop bad actors operating and ripping people off? I don't think it will."

He said a better approach would be for every project to have a "passport" which records all the work done.

"It protects consumers because you can find out which companies are doing a poor job, and it brings up the industry standards," he said.

The prime minister said rogue tradespeople gave their "decent, hardworking" counterparts a bad name and would be "putting the cowboys out of business".

Business Secretary Jonathan Reynolds said that, while home improvements can be stressful, "we're taking action to protect consumers, support reputable traders and make sure people can spend their money with greater confidence and security".

Shadow business secretary Andrew Griffith said the announcement looks like "the sort of government initiative that risks the unintended consequence of piling more paperwork onto the majority of businesses who already do the right thing".

He said: "The government would do far better to beef up law enforcement and have tougher sentences for the minority who fraudulently rip off customers. Those who break the rules will keep breaking them regardless of whether there is an app in the way."

Liberal Democrat business spokesperson Sarah Olney said: "Rogue builders cause real harm and ruin real lives every year. The current system is simply not fit for purpose and this half-baked announcement falls frustratingly short from fixing it.

"A voluntary code for tradespeople completely misses the mark. Rogue operators won't voluntarily sign up - they will simply keep exploiting families in the shadows."