For sale: country pad for city slicker

Fancy an idyllic holiday cottage in the Lakes? Hands off. They're homes for needy locals, says Nicholas Timmins

In the Lake District village of Rosthwaite five small stone-built, white-washed cottages nestle in the valley alongside the River Derwent. Above them tower the fells of High Seat, Glaramara and Dale Head. The cottages look as though they have been there for 150 years. But they are brand new - double-glazed, all-electric, highly insulated replicas of a past way of life. They have just won a Civic Trust award. They are built and owned by the Home Housing Association, whose task, like that of all housing associations, is to provide affordable homes at below-market rents. And they are the centre of an intense controversy over the latest phase of the Government's housing policy.

For the Government wants to give housing association tenants a new right to buy. Many of the tenants in Rosthwaite and other similar small housing association developments scattered through rural Britain, from the Lakes to the New Forest and beyond, would like to take advantage of it. But the housing associations themselves - and many of Britain's leading housing experts - believe it is a right they should be denied. The future and nature of rural economies is at stake, they argue - whether they will remain places that local people can live, or whether they will increasingly become the preserve of wealthier incomers, those who commute or use the houses as second homes.

The point was put forcefully last week by Richard Best, director of the Joseph Rowntree Foundation and a Rural Development Commissioner. As he unveiled the Civic Trust's award for the five homes built two years ago, he warned that if the Government's plan goes ahead, it may prove impossible in future to build similar low-rent social housing in areas of outstanding natural beauty. "Landowners may well be unwilling to make sites available on favourable terms, and planners will be less willing to give permission if there is a chance that the homes will be lost," he says.

The fears are not unfounded. They are illustrated by the past. In 1953, the Home Housing Association built a dozen houses in Rosthwaite for rent. But in the Eighties the tenants were given the right to buy under the same legislation that has seen 1.4 million council houses sold.

Since the original tenants bought them, 11 of the 12 homes have been sold, the association says - allowing the former tenants to make a profit - while some of the dozen have become holiday lets, not homes for local people.

"Most people here work on the land or in the tourism and service industries," says Alison Blair, Home Housing's spokeswoman. "They cannot afford the high house prices and rents that people from outside the Lake District can pay. In the season, rents in Rosthwaite are about pounds 350 a week, while our rents are pounds 47 a week. Local people are being priced out of the area by its popularity, so social-rent homes are needed."

To build its new scheme, a planning agreement was needed from the National Park Authority, something not easily won when the authority's job is to protect the beauty and tranquility of the Lakes. The land provided was the orchard of a private house, sold to the association at one-third below market value because building permission would be granted only for social housing.

Alan Kilburn, Home Housing's chief executive, adds, "It was not easy to convince the Parish Council of the importance of trying to provide low-cost homes again in Rosthwaite after the previous homes were sold on." If a new right to buy is granted, the problem will be compounded, he says.

The association has a powerful case. But not everyone sees it that way. Sharon Thompson, 24, a former hairdresser, is one of the tenants of the new Rosthwaite scheme. She lives there with her two young children and husband, Carl, 32, a self-employed joiner who grew up in the village. Before the cottages were built, they had to live apart with their mothers - she in Keswick, he in Rosthwaite. They could neither buy nor rent.

"Prices were too high," says Sharon. But while delighted with her new home, there is one fly in the ointment: she won't be able to buy her home when they can afford it. "It's the only thing that upsets me about this. Renting is pouring money down the drain. We'd much rather be able to buy our home." It "won't be fair", she says, if housing association tenants in towns are given a new right to buy through the pounds 16,000 voluntary purchase grant the Government plans, while rural tenants are denied it.

Mr Kilburn acknowledges the dilemma. His association backs right to buy in urban areas, where most of Home Housing's stock lies. But rural areas are different, he argues. "I know what we are saying sounds tough, but circumstances alter cases. If we have to sell, we may not be able to build again and local people will find themselves priced out of their own area for ever."

Measures the Government has suggested to ease the impact of its plan do not solve the problem, Richard Best says. Ministers have suggested limiting resales to people who have had links with the area for three years, or giving the association a right to buy back on the first resale. The latter poses significant cash-flow problems for associations, Mr Best argues, and the former still means that the houses will be lost forever as low-rent homes for local people on low incomes.

His solution is that the Government should exempt schemes of fewer than a dozen homes in settlements of fewer than 3,000 people. In practice, that would deny the right to buy to only a few hundred tenants out of the 55,000 for whom the new voluntary purchase grant is intended. "Such an exemption, though, would avoid the danger of future opportunities for social housing drying up in key rural areas."