HAs increase grant bids after 'use it or lose it' plea

Figures released by the Housing Corporation reveal that on average associations bid at 52.2 per cent of grant on each scheme against a headline rate of 54 per cent.

They come after the corporation warned associations to "use it or lose it" on the grant rate. Corporation officials are now confident of meeting tough new rent caps which were held, on average, at last year's levels.

The figures confirm the end of the days of cut throat competition amongst associations - previously ministers cut rates after associations underbid by a large margin in an effort to win schemes.

Last year associations bid at 50.2 per cent. Even though this figure was then within four per cent of the headline rate, the then housing minister Hilary Armstrong said she was surprised it was not higher after the emphasis on using grant rates to get rents down.

Other figures released this week suggest there will be a sharp drop in the number of homes produced from next year's programme because of a rise in land and construction costs.

The average public subsidy bid per home was £42,456 - an increase of 16 per cent on last year - which signals that resources will be more concentrated on fewer homes.

National Housing Federation head of regeneration and investment Abena Nsia said: "Social landlords are now using it not losing it. The problem will now be whether the grant rates and TCI rates keep pace with increasing costs."

She added: "Increasing land and construction costs are now being reflected in an increasing requirement for public subsidy."

The figures from the corporation also showed a 48 per cent increase on bids for works to existing stock after the agency relaxed its rules on the rent surplus fund. Associations can now bid for grant for schemes if they have more than £500,000 in their funds.

There was less overbidding in this programme, but £4 was still bid for every £1 of grant available.