Like thousands of other Asian families in Britain, the Karims were not rehoused by the council when they asked to be moved with their six children from a two-bedroom terrace home shared with three other adults. Instead they turned to one of the fastest growing areas of affordable housing - ethnic housing organisations which are building estates for families who are black or of other ethnic groups.
At the start of the decade there was only a handful of such associations; today there are more than 60, letting 15,000 homes.
Research just published by the Karims' landlord, the Oldham Muslim Housing Association, gives an insight into why the associations have boomed. It reveals that in Oldham, where two-thirds of the large Asian community live in poor, often overcrowded housing, Asians have been discriminated against and suffer racial harassment on estates in mainly white areas.
The town hall, the report explained, does not have suitable accommodation for large families. Although the first Asians arrived in Oldham 30 years ago to work in the mills, few council houses have been built that are big enough for extended Bengali and Bangladeshi families, with their many children and resident grandparents.
Families also told the researchers that language problems made it hard for them to communicate with council housing officials who in turn had little concept of the way in which religious and cultural beliefs could require certain house designs.
Mr and Mrs Karim's newly-built home not only has five bedrooms but also two living-rooms, enabling men and women to be segregated as their religion requires. "We have space, but we are still close to our old neighbourhood where we knew people. We're close to the mosque and schools for our children," Mr Karim said.
Housing associations across Britain working with black and other ethnic families say that African, Asian, Afro-Caribbean, Chinese, Vietnamese, and refugee families feel far safer being housed by them than by town halls and mainstream housing associations after suffering from racism, which can range from a frosty neighbour or a taunt to a brick through a window or physical assault.
One of the oldest associations is Manningham in Bradford, which has built nearly 500 homes in the past five years in the neighbourhood where hundreds of Asian youths fought the police last weekend.
Manningham HA director Anil Singh says: "People turn to us not only because the council has little on offer but because even if they could find a large enough house they would not go there. The harassment would be so bad that it would not be worth living there.
"It means people are staying here in Manningham, among their own kind. Yes, you could call that creating a ghetto. But if they had stayed in their former homes, they would have been ghettoes too - except they would have been overcrowded, damp, rotting ghettoes."
In Tower Hamlets, which has one of the largest immigrant communities in Britain, council leader Dennis Twomey responded to the Bradford riots by speaking of the need to encourage ethnic minorities to "mix with the wider community". Yet Mr Twomey's own borough is supporting the construction of a housing estate specifically for Somali refugees.
Hard-up boroughs restricted by government legislation from spending money on building homes find they can get houses built if they identify groups such as refugees and support housing associations to get grants via the Housing Corporation's "special needs" categories.
Five years ago there were just over 4,000 flats and houses managed by specialist ethnic housing associations throughout Britain. Since then pounds 471m of government money has been channelled via the Housing Corporation's special-needs and ethnic-minority strategies to 60 ethnic housing associations which have used the cash together with privately raised finance to build another 11,000 homes. The associations have also enabled members of ethnic communities to become involved in running organisations for themselves.
Sian Jones of the Housing Corporation said: "The corporation accepts that some ethnic groups do want to stay together. These associations would be more attuned to their communities' needs."
In Manchester, the Tung Sing HA has been building flats for Chinese people who had suffered a deepening sense of isolation on mainly white estates.Tung Sing's director, Janice Wong, said: "If they take one of our flats, they can live among people who understand them. There are no language problems, no cultural difficulties."
The Housing Corporation's decision to invest money in ethnic organisations is supported by the Commission for Racial Equality. But policy officer Colin Hann warned: "We can't compensate for discrimination by bringing in more discrimination. We would be concerned if they could house white people and they were turned away."
Housing associations, aware of this problem, have offered accommodation to white families. In Manningham, for instance, they have offered large white families sizeable houses when none was available from the council. In Oldham, the Karims' neighbours include a few white families.
In the next few weeks the Housing Corporation is to decide whether to continue its ethnic housing policy. There are indications from Whitehall that some civil servants are concerned about the way in which some of the organisations have been run. A few have been closed because of the way in which their finances were handled.
But there is fear that some associations, still trying to find their feet in the complex world of grants and finance deals in which all housing associations now have to engage, could fold if the corporation pulls the plug on its extra funding of them.
The Federation of Black Housing Organisations estimates that of the 60 associations aided by the corporation's ethnic policy, 25 are not yet viable without special help, such as extra money for training. "That could take another five years," said the director, Louis Julienne.
Back in Oldham, two skinheads emerged from a pub on the town's main thoroughfare, Union Street, and made obscene gestures in the face of an Asian teenager. A few doors away, Peter Godby, seconded from a mainstream housing association to help the Muslim one, worried about gangs and the need to build racial harmony.
"We do have people coming to us because they suffer racial harassment, and we do get opposition to our projects. People disguise their objections, saying they don't want land built on.But we are trying to counter complaints, and we house white people as well."