Cash for rural housing may go to market towns, says ODPM

Government funding for rural housing is likely to be channelled into market towns rather than villages, the senior civil servant in charge of housing has said.

Neil McDonald's prediction came as the Countryside Agency issued a report highlighting spiralling house prices and growing homelessness in rural areas .

Speaking at the Chartered Institute of Housing's annual conference in Harrogate last Wednesday, McDonald, director of housing at the ODPM, said: "The government is committed to ensuring a fair share [of funding] is allocated to the needs of rural communities.

"It wants the money to be used in the best possible way and not skewed to very small communities if need is better met in, say, small market towns."

McDonald's comments indicate the Housing Corporation's rural programme, which has set a target for a total of 3500 new affordable homes for settlements of 3000 people or less by 2006, is unlikely to be renewed, with focus shifting to larger settlements instead.

Rural housing providers have warned that the shift could lead to the decline of small villages.

Justin Roxburgh, chief executive of Falcon Rural Housing in Somerset, said: "Market towns seem to be deemed more sustainable in terms of services than little villages. However, our experience is that small villages have a very real need and that people want to live in them because of established social networks. If people are forced to move to market towns, those networks will die. This is very much a Westminster view of rural housing need."

Roxburgh added that the Countryside Agency's State of the Countryside 2004 report, released on Monday, highlighted the need for greater investment in villages.

The report showed that homelessness in remote rural areas has shot up by nearly one-third between 1999 and 2003, rising to 10,063. And house prices have risen faster than in urban areas, with 36.8% of households having to spend more than 50% of their income on mortgage repayments, compared to 33.2% in 2003.

It also found that some 115,000 people are moving from urban to rural areas each year.