Communities secretary Eric Pickles has called for institutional investment in the private rented sector to help drive housebuilding numbers.
Speaking to developers at a conference in Wales last week, he said the government had brought forward a number of measures to aid institutional investment but housebuilders needed to target the sector with large-scale developments.
Mr Pickles said: “If institutional investment in homes to rent supports growth and creates jobs, anybody in their right mind will be in favour.
“Canny housebuilders will be thinking hard about the potential of the private rented sector.
“But few [developers] commission, design and build for longer term, large-scale investment and management. And perhaps there is some scope for this in the future.”
Grainger executive director Nick Jopling backed the communities secretary but said government and industry should work together to “get the message out that it’s OK to rent”.
Mr Jopling said the UK had a historic lack of investment compared with countries such as Germany and the US.
But he said the announcement by developers Qatari Diar and Delancey to make the Olympic Village a rented community had “caught a lot of institutional attention”.
“It was disappointing we didn’t have our own pension funds looking at it,” he added.
Mr Pickles also called for more innovation in the mortgage market. He said he had seen “encouraging signs” from lenders but wanted more innovation.
He said: “Some lenders and investors are thinking about shared equity mortgages backed by social capital.”
Home Builders Federation director of economic affairs John Stewart said housebuilders had already sold around 30,000 homes under shared equity schemes.
But he said such deals involved locking up funds “and that means less development”.
Directing more planning gain to infrastructure rather than social Housing was a better way to bring forward development, said John Charcol senior technical manager Ray Boulger.