Black housing association in crisis over £4m loss

Ujima Housing Association, which manages around 4,600 homes in London, Slough and Reading, has become insolvent and defaulted on all of its loans which means thousands of tenants risk losing their homes unless a rescue deal can be found.

Figures show that in 2006-07 Ujima made a £2 million loss. But accounts up to 31 October last year show losses had doubled to more than £4 million.

Concerns have now been raised about how the housing association lost so much money.

Reading East MP Rob Wilson said that the case raised questions about the structure of the system, "as this is the first housing association to effectively go bust".

"Has there been a lack of oversight? Is the system of handing out taxpayers' money lacking rigour? How was so much taxpayers' money allowed to go to this organisation without picking up the problems sooner," the Tory MP asked.

Three Ujima board members have been axed including chairman Adonis Daniel and chief executive Keith Kerr.

Ujima, which means " working together" in Swahili and whose patron is poet Benjamin Zephaniah, was set up in 1977 to tackle the housing problems facing young, black single men and women in London.

It provides more than 12,000 people with homes and its property portfolio of 5,000 houses is worth almost £1billion.

Now the Housing Corporation, the Government body that regulates housing associations in England, is trying to come up with a solution that will safeguard tenants' homes and has stepped in with a moratorium to prevent any creditors forcing Ujima into liquidation.

It is believed Ujima ran into difficulties after pursuing a rapid expansion programme.

The most likely rescue deal would be for it to be taken over by the London Quadrant Housing Group which is larger.

The idea is favoured by the Housing Corporation but some of Ujima's shareholders want Ujima to continue to be a black-led housing association.