The companies said on Thursday the joint venture would initially build 2,000 new homes in Liverpool and Salford in north-west England, with a total development cost of 200 million pounds.

They said there was the potential to grow the portfolio to 6,600 homes, with a total cost of 700 million pounds.

"As we compete in a tough global race, Sigma's joint venture with Gatehouse is brilliant news for the North West and for Britain, showing that we are open for business," British Prime Minister David Cameron said in a statement.

"The rental market is a vital asset to this country and this new investment will help to boost local economies, create jobs and deliver more homes for hardworking people," he said.

The government has made housing a key issue in the run up to the 2015 election as the country copes with a mismatch in housing supply and demand, providing loans to help Britons purchase homes and funding a 1 billion pound Build-to-Rent fund to encourage investment into rental housing.

The deal also comes as Britain pushes for London to become a leading hub for Islamic finance. In October, it became the first Western country to issue a sovereign sukuk, or Islamic bond.

Gatehouse will provide the equity element of the venture and both parties are in negotiations with banks for financing to complete the initial 200 million pound phase, they said. Construction is expected to take place over 24 months once financing is secured.

The bank has an option to provide more equity for the 500 million pounds needed to build a further 4,600 new homes, the companies said. The new homes will be built on land procured and developed by Edinburgh-based Sigma.

(Reporting by Brenda Goh; editing by Kate Holton)