The National Housing Federation (NHF) has rejected proposals by the Liberal Democrats' Treasury spokesman, Vince Cable, to shore up the construction industry, which would see housing associations buying up 150,000 unsaleable properties from private developers.

The scheme would lead to a 100-fold increase in the number of homes bought by housing associations from developers, regardless of whether the homes meet the high space and environmental standards of social housing.

The Federation says that while there is scope to raise the number of properties that associations are buying from developers, the increase proposed by Vince Cable would flood the social housing sector with substandard homes, and could put many associations out of business.

Mr Cable's proposals echo the housing market rescue scheme run by the Conservative government in the early 1990s, when there was little difference in build quality between private developer and housing association homes. But associations now meet significantly higher environmental standards than those required of private developers - with association homes producing 25% fewer carbon emissions than their private sector counterparts. Housing associations also build to much higher space standards to combat overcrowding.

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In proposals submitted to government last month, the Federation said that housing associations should be supported to buy more homes from private developers, but only if they are of sufficient quality for social housing.

Otherwise, they should be allowed to use government grant and their own resources to buy up uncompleted developments, and land that developers are unable to build on.

Ruth Davison, Director of campaigns and neighbourhoods at the NHF, said: "Housing associations are already buying up unsaleable properties from private developers, and there is certainly scope for them to buy more. But it is hard to see how they would achieve the 100 fold increase proposed by Vince Cable. It would flood the social housing sector with unsuitable homes, as private developers typically build to lower standards than housing associations.

"Developers are having real difficulty selling the glut of shoebox flats which are currently on the market. They aren't spacious enough for the families that are on waiting lists for affordable housing - and if housing associations are compelled to buy them, they will become the slums of tomorrow.

"It is also difficult to see how Vince Cable's proposals would be funded, as 60% of the cost would have to come from associations themselves."

(CD/JM)