The country's biggest property developers believe that a branded rental sector could offer ministers and home builders a lifeline in bringing vital investment into housing.

The report, 'The Future of Renting', is a response to a government review of rental, and report calls for a radical reshaping of the housing market that would ease the burden by ensuring renewed investment to see new properties come forward, saving thousands of jobs.

"We're in a ridiculous position where we have increasing demand yet house builders are stepping out of the market because they have nobody to sell to," explained Ian Fletcher, Residential Director of the British Property Federation (BPF).

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"If we had a corporate rental sector here as they do in Europe, it would not only mean continued investment and thousands of extra new homes, it would also ensure that the major house builders had someone to sell their stock to and that the public had the benefits of a branded rental sector."

With buy-to-let expansion killed off by the credit crunch, developers want a housing sector to mirror the commercial property market which could see long term lets and thousands of new family homes built by institutions, like pension funds.

Liz Peace, Chief Executive of BPF, said: "Caroline Flint has shown acute awareness of the situation and is clearly keen to work with the industry. The government has a great opportunity here, because councils already have the powers to do what is needed.

"The expansion of buy-to-let is dead for the time being and the only place we will find the kind of cash we need to build new homes is with the large, long term investors. Rental is up to 40% cheaper than ownership, but if ministers don't take action, we could see rents rise by a third and cost the same as mortgages. The focus here has to be on the big issue, ensuring that tens of thousands of households of people are able to have a home, without any need for public spending."

(CD/JM)