Vistry Group PLC (LSE:VTY) shares rose 3% to 641.72p after the housebuilder agreed a long-term joint venture with the government’s Homes England housing agency.
The new vehicle, called Hestia, is backed by a combined £150 million of capital investment from the pair.
Hestia will focus on buying and developing "strategic sites" ranging from 400 to 3,000 homes.
Vistry said the JV would also seek to sell parcels of land on larger sites to SME developers, reflecting both parties' "commitment to supporting the wider housing sector and enabling greater market participation".
Last December, the government announced a £700 million extension to the Home Building Fund, and in June launched the £16 billion National Housing Bank.
Pat Ritchie, chair of Homes England, said: "As the government’s housing and regeneration agency, one of our key responsibilities is to unlock strategic housing sites by working with both the public and private sector to bring them forward at pace and scale, helping to meet the government’s housing targets.
"This joint venture with Vistry Group will do just that, by targeting large sites capable of delivering up to 3,000 new homes in well-designed communities, while continuing to support SME housebuilders in achieving their own growth ambitions."