Fund will create 4400 homes and benefit 34 associations but Peabody or Guinness miss out
Some of the largest developing housing associations have missed out on a share of the £200m Challenge Fund.

The Peabody Trust and the Guinness Trust, two of the better-known housing associations to submit funding bids, failed to appear on the list of winners announced on Tuesday by the Housing Corporation.

The money has instead gone towards schemes such as a partnership between East Thames and Toynbee housing associations in flagship areas such as the Thames Gateway in east London.

In total 34 housing associations are to benefit, and as a result are expected to develop 4400 homes – 400 more than anticipated – in London and the South-east.

Of these, 2800 are expected to house key workers, and approximately 1800 homes will use some form of modern construction methods, including off-site manufacture.

The design element was one of the key areas stipulated by Rooker when he launched the fund in September (HT 12 September, page 7). But there have been murmurings since, because the tight six-week timetable imposed by the government meant associations were unable to produce the kind of innovations, such as factory-built homes, that the housing corporation was looking for.

Richard McCarthy, Peabody chief executive, expressed surprise that two of Peabody's bids had been excluded. They used off-site manufacturing techniques and he felt they were innovative designs.

RSLs have responded magnificently – we received bids for five times the number of homes in the programme

Neil Hadden, Housing Corporation

"They are exactly the type of schemes the corporation should be funding," he said. "However, they may fund it in the approved development programme and we would be happy about that."

The Housing Corporation received more than 90 submissions, far more than was expected when the fund was announced.

Neil Hadden, Housing Corporation assistant chief executive, said: "The associations have responded magnificently. We received bids for five times the number of homes included in the programme."

Peabody's McCarthy pointed out that his bids had been hit by late changes to the bid criteria. After the announcement of the fund, the Housing Corporation attached additional criteria that the schemes should involve a minimum of 50 units with planning permission to begin work on site before within the financial year 2003/04.

In addition the scheme was expected to be able to delivered below-average costs and grant levels in this year's programme.