The British Property Federation (BPF) has asked councils to act now and create a corporate rented sector, Property Week has reported.
It welcomed the government’s review into the market and proposal for a green paper, but urged legislators to act quickly and relax section 106 agreements.
"Local councils already have the powers to treat developments built for let differently, and to reduce the level of section 106s they have to pay," said Ian Fletcher, director of residential property.
The BPF has claimed an institutionally funded buy-to-let sector would attract funding to develop longer-term rental builds and help to stabilise the housing market.
"The BPF believes that ministers must look to encourage institutions such as pension funds to invest in long term housing solutions," Mr Fletcher said. "This can be done with planning reform, to recognise rental development in its own right, and through widening the scope of affordable housing."
The first quarter of 2008 has seen a 27.6 per cent fall in private starts and 22.4 per cent fewer completions, it revealed.