Move is part of a package of measures to aid ailing housebuilding sector

Regeneration agency English Partnerships is looking to act as broker to get major institutional investors to prop up the ailing housing market, according to sources close to the move.

The agency is talking to at least three major financial institutions and several large housebuilders about building homes that could then be purchased by investors and let to private tenants.

The move is part of a package of measures being worked on by EP to stimulate activity in the housing market, which could form part of Gordon Brown’s mooted plan to regain public support in the autumn. Other ideas include providing developers with public money to finance developments and setting up a vehicle to redevelop EP-owned land.

The government is expected to announce in the autumn which measures will be taken forward.

A source familiar with the discussions said: “Many institutions haven’t touched residential before, but see an opportunity now.”

A separate source close to the government said that although the idea of using EP to provide development finance was being discussed, it was at an early stage. “This is a bit of a long shot,” the source said.

The speculation comes as research suggests that the decline in housebuilding may have bottomed out. Figures from the NHBC, compiled for Building, show that average daily sales by housebuilders rose in July to 530, the first time the figure has been above 500 since January.