Housing providers have warned that the government is ‘storing up future problems’ because more than three-quarters of its grant funding programme will be used for the development of one and two-bedroom homes.

According to Insider Housing:

Of the 62,000 homes to be developed with the 2015-18 affordable housing grant allocation, 77% will be one and two-bedroom properties after the government requested that providers focus on smaller-sized properties.

The allocation has been widely interpreted as a reaction to under-occupying tenants needing to downsize to avoid the bedroom tax.

Melanie Rees, policy and practice officer at the Chartered Institute of Housing, said: ‘It is quite short-termist, and a response to a policy that may not be around in eight months’ time, depending on the outcome of the election.’

Karen Buck, the parliamentary private secretary to Labour leader Ed Miliband and a member of the work and pensions select committee that scrutinised the bedroom tax before it was passed, said: ‘[The government] should be trying to provide for housing need in all parts of the country, not floundering around with a knee-jerk reaction to one specific policy.’

‘It was warned that there weren’t enough small houses for the policy to work during the passage of the bill, but the warning was rejected.’

Housing providers told Inside Housing that civil servants from the Department for Communities and Local Government (DCLG) had contacted them to scrutinise why they had included bids for funding to build family-sized homes.

Tony Stacey, chief executive of South Yorkshire Housing Association and chair of the Placeshapers Group of more than 100 housing associations, said there had been a ‘clear steer’ from government to providers that it wanted them to prioritise smaller homes.

Ian Munro, chief executive of New Charter Housing, added: ‘It would be wrong to be driven by the bedroom tax.

‘There is still a huge need for large and family-sized homes, and not building them could store up problems for the future.’

A spokesperson for DCLG said: ‘It’s clear that councils are meeting their local needs for smaller one and two bedroom properties, both in this round and the previous programme – helping to address the unfairness in the housing benefit system, in which some families on benefits have been able to live in homes that most working families could not afford.’