There will be a catastrophic collapse in provision of new social housing at a time of record waiting lists without urgent intervention by the government, housing associations have warned.

Britain’s 1,900 social landlords, which own half the UK’s stock of 4m council houses, are urging ministers to change the way they are funded to prevent the supply of new, affordable housing drying up completely.

Their ability to build social housing has been hit by the credit crunch, with rising fears about their own financial health.

The Housing Corporation, which funds and monitors the sector, has begun an urgent review of 258 associations. Of 39 examined so far, four have been given an “amber” warning, meaning there are serious fears about their future. Most associations have had to carry out 'remedial strategies', according to the quango.

The associations are, meanwhile, lobbying the government to relax limits on how much central funding can be used for development schemes. At present the grants from the Housing Corporation can provide only up to 40% of a scheme’s funding, with the rest coming from borrowing or sales of private dwellings within the same projects.

Financial Times