Although the housing market and house builders are feeling the pinch in the current property slowdown, it is not all gloom and doom. One option for developers to supply the homes required and keep Gordon Brown happy with regards to housing targets is ‘build-to-let.’

According to a study from CB Richard Ellis Residential this well-tested concept – popular with investors in America – where builders earmark certain purpose built blocks of flats for the private rental sector could prove to be a success here.

The blocks can be kept as an investment by the developer or sold whole to another investor. There could be potential for individual investors to put their money into ‘build-to-let’ schemes too, say some property experts.

‘Faced with weaker conditions developers need to think strategically,’ argues Jennet Siebrits, CBRE’s head of residential research. ‘Build-to-let might be a viable choice and could revolutionise the rentals market.’

With rentals currently up and prices rising, there is a current shortage of places for tenants to live. Siebrits says that in recent years residential has outperformed commercial property, but only if capital gains are taken into account.

‘As many investors concentrate on income returns rather than capital returns they have not invested in the residential sector,’ he explains. But with the commercial market flagging this is changing.

‘Build-to-let investors should not be deterred by a weaker housing market. It is a long-term strategy based on income streams, which will be buoyed even if the owner-occupier market is uncertain,’ advises Mr Siebrits.

He adds: ‘The availability of funding is decreasing due to the impact of the credit crunch, but this should not hamper cash-rich investors.’