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The Homes and Communities Agency is to decide within the next month which schemes go ahead as it looks to take projects off hold following yesterday鈥檚 拢390m Treasury settlement.

The housing quango will prioritise funding for schemes which deliver the most social rented homes.

The HCA had put all its uncontracted schemes on hold when the Treasury said in May it could not rely on receiving 拢610m of Labour-approved funding. Yesterday鈥檚 settlement, announced by Treasury chief secretary Danny Alexander, means the agency has had 拢220m cut from this figure, but can rely on receiving the rest.

HCA chief executive Sir Bob Kerslake said the body鈥檚 regional offices would now talk to bidders about which schemes will go ahead and which will be cut, with decisions expected to be taken in July. He said: 鈥淪chemes will be considered with the aim of maximising the affordable housing output from the agency.鈥�

The HCA put its general affordable housing programme, its local authority new build programme and its Kickstart programme to restart stalled private sector schemes, all on hold in May. The 拢390m has been found by Treasury under the clear instruction that affordable units rather than private homes are prioritised, leaving developers concerned that Kickstart schemes will lose out.

Kerslake said: 鈥淐learly the private side is going to be quite constrained. I don鈥檛 want to give the impression we鈥檙e easily going to be able to fund everything in Kickstart. But that doesn鈥檛 mean that they won鈥檛 get funded 鈥� many Kickstart schemes deliver a lot of affordable housing.鈥�

The 拢390m settlement means 拢140m of Kickstart, local authority and general affordable housing grants legally contracted but unfunded since the government came in, will now go ahead with immediate effect. Kerslake also said a small number of schemes which were ready for legal close in the week the election was called and earmarked for 拢50m grant, will definitiely go ahead. He said they will be signed off in the next two weeks. A list of these schemes, which were agreed but not signed before election purdah began in April, is to be distributed by the HCA this afternoon.

The remaining 拢200m of the settlement will go to the HCA鈥檚 regional offices to decide which projects will go ahead.

Housing associations, councils and private developers with schemes on hold will not be expected to re-bid for the reduced funding. Kerslake said they will be contacted by HCA regional officers to discuss the schemes, and whether any further savings could be made.

Kerslake admitted that yesterday鈥檚 announcement means that the coalition government has now made a total of 拢450m of cuts to housing spending in the current year, meaning a total of 5,000 fewer homes will be built. Spending beyond April 2011 will be determined by this autumn鈥檚 planned Comprehensive Spending Review.