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The Homes and Communities Agency is upping grant rates for social housing schemes threatened by the credit crunch, according to housing associations.

The government first pledged ‘more generous’ grants in September 2008, but associations complained that former investment agency the Housing Corporation was slow to act.

However, the National Housing Federation said that since the HCA took over on 1 December, grant rate ‘flexibility’ has been passed on to its members. The rates at which affordable homes are subsidised vary between regions and schemes. But before the credit crunch they were pushed down to around 40 per cent of the total cost due to associations cross-subsidising developments.

NHF assistant director Bob Wilson said: ‘We are beginning to get a feel from our members that the HCA is responding positively to the need to negotiate – on an individual basis – significantly changed grant rates.’

Raj Upadhyaya, group investment director at Guinness Partnership, said he had seen evidence of this new approach in every region that the HCA worked. The agency had offered extra grant to convert some of Guinness’ unsold properties to rental homes, and had also offered higher for new schemes, he added.

Family Mosaic chief executive Brendan Sarsfield said some changes had been apparent before the advent of the HCA. ‘We put a stop on development in July in terms of new allocations,’ he said. ‘But by October we had convinced the Housing Corporation to start increasing grant rates and make schemes viable again.’

HCA chief executive Sir Bob Kerslake said: ‘We will adapt the rate of grant both according to the scheme and the position of the housing association.’ Meanwhile, housing minister Margaret Beckett launched a £200 million mortgage rescue scheme for families facing repossession. It will help households who would be eligible for rehousing under homelessness legislation if they lost their homes.