THE UK's biggest residential landlord Grainger is preparing to launch a fund for investors to finance the building of more than 1,000 homes for rent.

The Newcastle-based company is teaming up with French construction giant Bouygues Development for the project which aims to raise around £150m from UK and international investors to create a build-to-let fund. Both groups are investing an undisclosed amount in the initiative.

The money will be used to build more than 1,000 units for the residential private rental market on land already earmarked in London and the South East.

Once the additional investment is in place, Bouygues aims to build the properties over a three-and-a-half-year period with the first units expected to be ready by the end of 2013.

The French group will look after the investment and construction process, while Grainger will operate the completed portfolio, including the lettings and property management.

It is understood that Grainger had been considering the project for some time, to take advantage of an appetite in Government and among the public for a larger scale private rented sector in the UK.

It is also the first time that public sector-owned land has become available for such a scheme. Last week, Housing Minister Grant Shapps announced a Public Land Initiative, under which the Government will release public land that has previously been used so that houses can be built on it.