It's social housing – so why are the needy locked out?

Developers and a London council are excluding anyone with mental health problems from a £500m scheme

People with a history of mental health problems are being excluded from social housing built in one of Europe's biggest inner city regeneration projects.

The developers and local council behind the central London development have also set quotas for the number of homeless and unemployed people who can live there, an investigation by Corporate Watch and The Independent has found.

In what critics have described as a "crude exercise of social engineering" extra limits have been placed on the number of families with children who will be allowed to live in the 500 social housing units under construction at King's Cross Central, while those with drug and alcohol problems or in rent arrears have also been excluded.

The exclusions – which have been unveiled in a series of freedom of information requests – are a departure from the usual points-based allocation process, which aims to let social housing to "those who are in the greatest housing need". Mental health problems and homelessness would usually increase an applicant's points total and position on the housing register. The King's Cross Central homes will be let through Camden's allocation scheme, but anybody who does not meet the special criteria will not be able to bid.

Mental health charities and housing groups have criticised the criteria. "I am shocked to see such a crude exercise in social engineering," said Alison Gelder, the chief executive of Housing Justice.

Social housing construction was a condition for Camden Council granting planning permission for the £2bn development in 2006. Argent, the property company leading the consortium, says it will bring major community benefits to the area, which has been given its own postcode – N1C.

A total of 1,700 residential homes will be built, the majority of which will be sold privately. In addition to 500 social housing units and 250 "intermediate affordable homes", 950 units will be sold privately.

When complete in 2020, the 67-acre site will contain the UK headquarters of companies, including Google and BNP Paribas, retail outlets, sports facilities, cultural spaces and the Central Saint Martin's College of Art and Design.

The Council, developers and One Housing Group housing association, agreed a Local Lettings Plan for the allocation of the social and affordable housing in November 2010 to "establish a mixed, stable and sustainable community at the development".

The plan specifies "a maximum of 20 per cent of social housing lettings to be made to homeless applicants" and that children can account for only 23 per cent. Unemployed households can only account for 25 per cent.

When questioned by The Independent, Camden Council admitted people with mental health problems had not been allocated any social housing, but said the Freedom of Information response had been taken "out of context".

"In allocating the first tranche of flats at Kings Cross we were concerned that, as the infrastructure and social provision, which will come at a later date in the development, were not in place, vulnerable residents may have insufficient support to manage in these homes," a spokesperson said.

The council insisted it had a strong record of providing for vulnerable people elsewhere in the borough but it would not definitively confirm whether people with a history of mental health problems would be able to bid for future lettings at Kings Cross Central when they come up. Instead they said they "may be able to move to the development when the next lettings become available".

The site will also contain 55 supported housing units. Of these, 15 have been allocated to people with severe mental health problems, with the rest reserved for elderly people. However supported housing is not the same as social housing and is usually reserved for people who need regular or around the clock care.

Paul Farmer, chief executive of Mind, the mental health charity, said: "No one should be excluded from social housing or any other public service solely by reference to their mental health status. We have come a long way since the days of asylums, and segregation on the grounds of mental health is completely unacceptable."

Dr Stuart Hodkinson, an academic at University of Leeds specialising in housing privatisation, believes the development is a sign of things to come: "This is what 'localism' is really all about when combined with cuts to social housing and housing benefit – empowering private developers and big social landlords to be able 'cherry pick' their social tenants."

King's Cross Central is being developed by Argent and Hermes Real Estate, owned by the BT Pension Scheme. The land is owned by the state-owned London & Continental Railways and German logistics company DHL.

Robert Evans, a board member of King's Cross Central Limited Partnership said: "KCCLP has no policy of excluding people with mental health problems from the social housing at King's Cross."