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With funding for new homes, like Gordon Brown’s housing targets, a thing of the past, private rented landlords will be called on to fill Britain’s housing gap according to the British Property Federation (BPF) annual housing conference.

New research from Hometrack shows a massive gulf between social housing and home ownership. Despite the housing crash, ownership remain unaffordable for many and without new investment from pension funds or buy to let investors – both of whom drive the private rented sector – there will not be enough homes to meet demand from those that don’t qualify for social housing but who can’t afford to buy.

Pension funds and institutional investors will have to bail out public sector as funding for social housing has totally dried up. More private rented housing must be encouraged by councils and by the next government. Several large investors, such as Aviva and Legal & General have already signaled interest in multi-billion pound rented housing schemes.

With the FSA’s decision on whether to regulate buy-to-let mortgages due within a week, extra pressure will be expressed today by the BPF against the will of many lenders keen to avoid regulator interference.

Ian Fletcher, BPF director of policy, said:

“The private rented sector has gained more attention in housing circles, but political support remain worryingly muted. That is a pity, because it’s the only way of satisfying housing need for the foreseeable future. We need to redouble our efforts to emphasise this is not just about quality renting, but about delivering the housing supply the country needs.

“The events of the past 18 months have illustrated more than any policy document why we need a quality, thriving private rented sector. The flexibility the sector provides for those who found themselves in mortgage difficulty, or having to move to find new work, or getting a better home for their family than they can afford to buy has been absolutely crucial to the well-being of our people and our economy.

“There is a tremendous goodwill across the sector and its stakeholders to move this sector forward over the next 12 months and we hope whatever hue of Government next takes office will step up to the mark in its support for housing and the private rented sector.”

Andrew Cunningham, chief executive of Grainger, the UK’s largest listed landlord, said:

“It is now painfully apparent that with new house build levels well below 100,000 units for 2009, the government’s ambitious 2020 target of three million homes is unachievable. Funding, investment and delivery will be key issues for 2010, but with housing supply in the spotlight it is action, not debate, that is required.

“If the recession taught us little else, it highlighted the need to reform the UK’s approach to the housing sector. With the market so credit-dependent, the industry is exploring alternative business models that could engage institutional investors, bring forward developments and ensure the population’s housing needs are met. The private rented sector has been a subject on which Grainger has campaigned for some time and it appears that 2010 could be the year that the rhetoric might finally become a reality.”