Deputy prime minister John Prescott unveiled plans to consult on the fund at a press conference in London where he was announcing that 1 million social homes had been brought up to the decent homes standard since Labour came to power in 1997.
The gap funding scheme would be used to make up shortfalls in transfers where the homes' value is outweighed by the amount that must be invested in them.
The ODPM declined to comment on the size of the pot; it plans to reveal this after July's comprehensive spending review.
But experts said that for it to be effective across the worst estates, most of which are in inner-city London and Birmingham, it would need to be £800m-1bn.
The fund will make payments each year for up to 10 years and will be available to transfers in the 2004 programme and beyond.
Steve Stride, chief executive of 5000-home Poplar Harca, in east London, called for such a fund last month (HT 23 April, page 14).
His own registered social landlord was set up through a transfer funded by the Estates Renewal Challenge Fund.
He said: "It is music to my ears. However, the government needs to move quickly if we aren't to have to postpone some of the five estate transfers that we are involved in.
"If we had to delay them beyond the autumn that would be an absolute disaster. Tenants would lose confidence in the process and we have to keep them on side for this to gain momentum."
Ian Doolittle, partner and head of public sector at law firm Trowers & Hamlins, said: "This will unlock transfers in some of the worst areas such as [east London borough] Tower Hamlets. They wouldn't happen without it.
"It's about picking out some of the horrors and giving them a 'get out of jail free' card."
The Estates Renewal Challenge Fund invested £487m in 39 transfers involving 43,000 homes between 1996 and 1998. It made small-scale transfers possible in Birmingham and London.
Source
Housing Today
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