The high-street bank HBOS must inject about £100m of fresh cash into Crest Nicholson in the coming weeks to prevent the housebuilder from breaching banking covenants.

If HBOS, which owns 50% of Crest Nicholson, decides that it is unwilling to support the builder, its investment could be wiped out and the lending banks could step in and take control.

HBOS is also understood to be contemplating bringing in a partner to provide the funding. Hedge funds and private-equity groups are thought to be interested. HBOS has hired debt specialists at Deloitte to assist with the negotiations.

Crest Nicholson, led by chief executive Stephen Stone, was bought in 2007 at the height of the housing boom by Uberior Investments, the private-equity arm of HBOS, and West Coast Capital, the private-equity vehicle of the Scottish retail tycoon Sir Tom Hunter. Their joint venture valued the business at £715m. Hunter is the richest man in Scotland, according to the Sunday Times Rich List.

As part of the Crest Nicholson buyout, Bank of Scotland provided a debt package of £1.1 billion to refinance the company’s existing debt and to act as working capital. In June, the company revealed that profits for 2007 fell from £80.1m to £69.7m, which it attributed to costs associated with the HBOS acquisition.

HBOS has a £4.2 billion exposure to the housebulding sector with stakes in six companies, including the retirement-home specialist McCarthy & Stone, which is also renegotiating its £800m bank debt with its lenders.

The gloom in Britain’s housing sector shows little sign of lifting. Potential housebuyers have been frozen out by the lowest level of mortgage lending in more than a decade. This has pushed down prices, leaving builders with unsold properties and depleted cash reserves.

Separately, Redrow, another housebuilder, has appointed debt-restructuring advisers at KPMG to help negotiate a new bank facility with its lending banks. The company has complied with all its banking covenants this year, but experts believe that a future breach of covenants is a possibility if its debt is not restructured. Redrow’s market value has fallen by 65% in the past year to £277m, partly due to concerns over its £225m debt.

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