Whilst UK affordable housing crisis deepens, perhaps we should go Dutch.

Families struggling to find affordable homes have been dealt a bitter blow after Council plans to force developers to build more of the houses were scuppered by a legal challenge from house builders in Northumberland.  This means that councils now have to think of other ways to provide the homes that are so desperately needed.

Persimmon Homes, Barratt Homes and Millhouse Developments made a successful legal challenge to the supplementary planning document drawn up by Blyth Borough Council, on the grounds that the percentage of affordable housing had been increased without a viability assessment.

In low-wage East Anglia, Norwich City Council bosses had hoped to secure thousands of new affordable homes to rent over the next five years by increasing the amount homebuilders had to provide when given permission for housing developments.

Developers currently have to make 30% of the homes on sites with more than 25 units available as affordable housing, but the city council was drawing up planning guidance which would have meant builders had to allocate 40 % as low-cost housing in developments of 15 homes or more. This means that that the Council's policy will not be put into place, because officers fear they would face - and lose - legal challenges.

The news comes as a bitter blow, especially when considering that Norwich and the surrounding areas currently has a massive shortage of affordable homes and a huge backlog of people who want to move in to them.

Today, Brian Morrey, executive member for housing, said: “It is a disappointment, but we are looking at other ways to try to get the increase - a viable and legal way to do that. The good thing is that we had not already altered the present policy, which would have created real problems for us. But this won't be the end. It is a blow, but hopefully it will be just a blip.”

City council officers felt, in the light of the desperate need for more affordable housing in Norwich, that there was a strong case for lowering the threshold and increasing percentages and started consultations on its revised supplementary planning document (SPD) which would have tied developers to the changed targets.

A survey carried out in early 2006 revealed a backlog of need for affordable homes and the council believes that, across the sub region of Norwich, Broadland and South Norfolk, 4,200 affordable homes are needed over the next five years.

But this latest development will mean that, at a time when developers are already building fewer homes because of the credit crunch, the council will have to come up with another way to meet the ever growing demand for social housing from people, such as those who do not have enough money to buy or cannot get a mortgage.

Peter Jordan, regional projects director at Persimmon Homes North East, explained why his company had taken on Blyth Borough Council, saying: “The challenge was made because the council lacked the evidence to substantiate their policy. Planning policy must be formulated on a robust and credible evidence base and authorities that choose not to do this are in for problems.”

Norwich City Council was praised earlier this year for securing the highest number of affordable rented homes in the East of England and the most in UK.  Nearly 270 homes were made possible by Norwich City Council's work with developers in the financial year in 2006/7. A further 225 homes are expected to have been completed in 2007/8.

The blow comes at a time when the number of people joining the Home Options waiting list - the system used by the council to find people social housing - is on the up, with an increased number citing financial hardship. A city council spokeswoman said: “On a sub regional level, the area covered by Norwich, Broadland and South Norfolk district councils, we started the scheme with around 9,000 people on the waiting list and in the months following the scheme we saw, in some areas, an increase of as much as 50%. Currently the figure stands at 13,785. We are finding that more and more people are citing 'financial hardship' as their reason for applying and this could largely be due the current financial climate and also could be attributed, in part, to the introduction of our new scheme.”

While in Britain only 18% of households rent their home from councils, housing associations and cooperatives, around a third of homes in Holland are owned by housing associations - and in Amsterdam that rises to every other household. One of the key policies being followed by the Dutch associations is to mix up neighbourhoods, bringing private buyers into poorer areas and people who need social assistance into richer ones. That extends to the red light district too, where prostitutes now find themselves living side by side with loft-dwelling young professionals and neighbours.

With the rate of repossessions expected to hit 45,000 in the UK this year, up from 26,200 in 2007, housing campaigners are now looking urgently to Holland for inspiration on how to create a system of effective social housing for a new generation.

In 1979, 42 % of the British population lived in council housing, but more than two million homes were sold off during the Right to Buy scheme introduced by Margaret Thatcher. These homes were, for the main part, never replaced, meaning the amount of social housing in Britain has been dwindling ever since. In contrast, the Dutch have vehemently opposed such ideas, and steadily increased the housing stock available to vulnerable people.

"The fundamental problem in the UK is the desperate lack of social housing, especially at this time of plunging house prices and the rising tide of repossessions," explains Shelter chief executive Adam Sampson. "Prime Minister Gordon Brown has promised to build tens of thousands of social homes over the next three years and beyond. He must now turn these words and promises into homes. Holland has proved itself to be one of the leading countries in maintaining its social housing stock, and also not allowing social housing to be stigmatised as bad or only for the poorest in society. 2.4 million dutch homes are rented from social housing schemes and there is no stigma to this."

Councils and housing associations are obviously going to need every bit as much of a bail-out from Gordon Brown as the banking industry, if families suffering increasing financial hardship in the UK are not to find themselves homeless.