A breakdown in communication between a council and a government housing agency led to the loss of half of the social rent properties in a flagship scheme.

Those homes will be converted to affordable dwellings - meaning families could face higher rent bills.

A total of 96 properties in the South Oxhey Initiative were supposed to be permanent social homes.

Three Rivers District Council applied to the Homes and Community Agency for £2.83 million towards it.

But it did not realise that a condition of the funding meant rents would rise to ‘affordable’ - 80 per cent of market rent - when 48 tenants moved.

Neither organisation checked how the agreement had been interpreted, meaning only 48 homes will have the lowest ‘social’ rent.

A council source said: “We didn’t know we needed to ask and neither did the HCA. We thought it was social rent and they assumed it was for social rent for the first tenancy.

“But nowhere does it say that in the documents.

“The only thing we are guilty of is not asking a question that we did not know it needed to be asked.”

The council insisted there was a late change in the agreement between them and the housing agency.

But an HCA response to a Freedom of Information request states “there is nothing to suggest the intention was social rent in perpetuity”.

Cllr Ty Harris, who represents Oxhey Hall and Hayling, said: “The market rate is only 20 per cent more than the social homes, but to people who are on social rent, that is a big increase.

“The council has been aware of these terms and they have tried to pull the wool over everyone’s eyes.

“Why have I found grey areas through my questioning and, in the years of preparation and dialogue with the HCA, the council didn't ask the right questions to secure the longevity of the social homes?”

Council leader Sara Bedford said,"It is quite clear both from the correspondence submitted by the council to the HCA, and the high amount of grant awarded that these homes were intended to be provided at social rent. 

"Nowhere in the HCA documentation does it state that this is for the first let only, nor was this stated by the HCA representatives when discussing the bid with the council.

"It is unfortunate that this was not able to be determined at an earlier stage, but as the Conservative government has made it clear they wish to do away with social rents, the alternative was to have no grant at all.

"That would have had a devastating impact on the provision of new social housing in South Oxhey."

A total of 117 of the 514 homes in the South Oxhey Initiative will be cheaper than an average flat in the new development.

This will be comprised of social homes, affordable homes and shared ownership properties, where people own part of the property and pay rent for the rest.

Some politicians wanted 96 of them to available for social rent – the cheapest option for the tenant.

The grant from the Homes and Communities Agency was agreed to help the authority protect the level of affordable housing in the scheme.

Three Rivers submitted an application for funding of £59k per property – the amount given to properties for social rent.

The head of major projects at Three Rivers District Council, Alan Head, wrote to the policy and resources committee at the authority, saying: “The problem arises from what appears to be a recently imposed and far more stringent application of government funding.

“It has become very clear what whilst the HCA accept social rents in the first instance, they are now requiring that on second letting the rent would have to convert to affordable rent levels.

“Affordable rent in this context is defined by government as being 80 per cent of the market rent.

“As you can imagine, I am now doing my best to argue this change is unreasonable but the argument is falling on deaf ears.

“It could come to a situation where it is a ‘take it or leave it’ scenario and that would jeopardise the entire £2.83m grant, which we clearly can’t afford.”

However, the HCA does not believe this is the case.

They rejected suggestions there was an “unexpected” change.

A statement from the organisation said: “The homes were for social rent on the basis of decanting with existing tenants rights protected. HCA policy sets out in the prospectus that this is a reasonable exception from affordable rent.”