Philip Hammond is investigating controversial reforms to the green belt as part of his plan to address the housing crisis in the Autumn Budget.
The debate over housing has been at the top of the government's agenda ahead of the Budget, with Theresa May meeting with Hammond and communities secretary Sajid Javid last week to formulate a strategy.
Hammond is looking at reclassifying parts of the green belt, according to reports in the Sunday papers, in a move that will prove unpopular with many in the party.
A senior Treasury source told City A.M. that while Treasury ministers were united behind the idea of radical planning reform, May is a staunch opponent as her Maidenhead constituency borders the green belt.
In recent weeks Javid has made a bold attempt at securing new funding for infrastructure developments that would unlock land for housing.
However, his plans have been rebuffed by Hammond, who has refused to borrow £50bn, saying that it would amount to "loading the price" of housing onto the next generation.
Speaking to City A.M., Carolyn Fairbairn, director general of the Confederation of British Industry, said housing was a "real challenge" in London and that progress was essential for firms trying to recruit young people in the capital.
"It's long been a challenge for young people," she said. "We also want to see housing addressed in the Budget."