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"I can't sleep at night for worrying about where we're going to live," says Nigel Payne-Wilkins. At the moment, he and his 16-year-old son Jesse are in a hostel for the homeless and on a 300-strong waiting list for council housing. "I've lived my life, but my son's just beginning his," says Payne-Wilkins. What's this going to do to him?"

Payne-Wilkins' story has a familiar ring but it comes with a twist. He is not from a deprived inner city but from Wymondham, a picturesque village in rural south Norfolk. In Wymondham, where the 39-year-old divorced father of two was born, he lived in a one-bedroom flat. When his 16-year-old son, Jesse, moved in with him at the end of last year, the £350 a week he earned as a paint sprayer would not cover the £582 monthly rent on a two-bedroom flat. The pair joined the council waiting list and were sent to a shelter in the nearby village of Long Stratton.

Their predicament is part of a growing rural housing crisis. The Countryside Agency, the government's statutory adviser on rural affairs, says 21,300 rural households were classified homeless last year – one-fifth of all homeless households. The average time on an urban authority's waiting list is 370 days; in rural locations the wait can be 426 days.

The government has begun to recognise the scale of the problem, but it stays focused on the urban South-east. The 2000 rural white paper, the Local Government Bill and the Communities Plan all included initiatives to ease the rural crisis, including cutting the council tax discount on second homes and increasing targets for affordable rural homes.

But last month it emerged that the Housing Corporation's rural programme has halved its output in the past five years. The corporation downplayed the figures (HT 9 May, page 10) but a week later a leading affordable rural housing provider, the Rural Housing Trust, revealed that only a fifth of its bids this year were given corporation funds.

This does not help the Payne-Wilkinses. Not only does Jesse have to revise for his GCSEs in the one room he calls home, but his 13-year-old brother, Lewis, has been deprived of a father and a brother.

Nigel has weekend custody but there is no room for Lewis to stay in the hostel. "He thinks his dad doesn't love him anymore," says Nigel. "I don't know what to do."

Keith Mitchell, south Norfolk's senior housing officer, says the situation is the worst he has seen it in 15 years in the job.

The council has 4556 properties, with another 1186 provided by registered social landlords, but – just as demand is spiralling – the stock is being depleted by right to buy sales. In 2001/02, 127 houses were sold in south Norfolk. The Housing Corporation funded 30 new homes and the council negotiated another 11, leaving the net loss at 86. Mitchell adds: "We've not got high hopes for the future either, with regional boards pulling towards the growth areas."

The rural white paper promised 1600 rural homes in 2003/4 and the Communities Plan raised that figure to 3500 – a total of 5000 in the next three years. However, between 1985 and 1990, about 91,000 rural homes were sold as a result of the right to buy and, since 1989, only 21,000 have been built. By 2002, social housing made up just 14% of rural stock, compared to 23% in urban areas.

The Communities Plan also promised that councils designated as "rural" could ensure homes sold under the right to buy can only be resold to registered social landlords or local people. However, authorities have to apply to be designated rural and only one has done so in the past year: Ribble Valley in Lancashire.

The Rural Housing Trust says these measures are inadequate. It estimates that 50,000 new homes are needed in villages alone. Chief executive Moira Constable says: "We have a long way to go before we are anywhere near an acceptable level of funding for rural housing. The Approved Development Programme was cut drastically in 1997 and it's still not back up to those levels."

The funding gap widens
Rural housing has also been hit hard by the abolition of local authority social housing grant. Grant funding was suitable for smaller schemes, so rural councils often used it to pay for projects that had failed to get Housing Corporation money. The grant funded about 7000 homes a year, many in the countryside.

"The abolition of the LASHG is going to annihilate some authorities' development plans," says Angela Lawrence, former chair of the Local Government Association's rural housing task group, which disbanded in March. "Targets are pretty meaningless if you don't have the funding to deliver."

I can’t sleep at night for worrying about this. I’ve lived my life, but my son’s just beginning his. What’s this going to do to him? 

Nigel Payne-Wilkins

Many rural schemes fall under the section 106 threshold. Ed Barnes, National Housing Federation regional officer for the East, says: "Developers are building a handful of four- or five-bedroom houses with massive gardens that don't qualify for affordable housing. If we have more and more large detached homes, what's it going to do to the character of the countryside?"

In addition, the sequential approach to planning means brownfield land must be developed before greenfield and, as Geoffrey Leigh – development manager at the Norfolk Rural Community Council, a charity – says, planners often resist rural developments because of a lack of infrastructure. "You can have a village that's in crying need of housing, but planners say it hasn't got the school or the transport. A lot of people just give up hope and move to a market town where a housing association has built."

The Communities Plan included a pledge to review all planning policy guidance in the next three years. This should help secure housing in rural areas, but there is little detail and a three-year wait for action.

Another major problem is second homes. There are an estimated 500,000 countrywide, which push up prices while the houses stand empty for much of the year. Homeowners pay just 50% council tax on their second properties, so councils lose an estimated £150m a year. The rural white paper said councils could slash council tax discounts on second homes and under this measure, now going through parliament, the discount could be cut to 10%.

But councils are not obliged to spend the additional income on social housing, nor will they be forced to charge the full 90%. "If you can afford to have a second home, are you really going to be that worried about paying £300 a year in council tax?" says the NHF's Barnes. "If councils want to make a difference, earmarking the increased council tax for affordable homes would be a good start."

The final tactic the government has planned is to deal with the lack of suitable sites for development. Even when money is available, councils and associations do not necessarily bid for sites as they do not have suitable schemes. As Leigh says: "The sites that are used are very different to urban sites. They are difficult to find and take a long time to come to fruition."

To bring forward more sites, the government is funding rural enabling officers, who work with councils to identify potential schemes. The Housing Corporation has put £458,000 into the scheme, with further money coming from the Countryside Agency, local authorities and housing associations. The scheme began in 2001, lasts three years and pays for 50 officers.

The move has been welcomed as a much-needed jump-start for planning in rural areas but more needs to be done.

Government 'fixated' on South-east
Campaigners say the government's strategies are not having much impact.

"It's easy to focus on the sexy issues like key workers, because it's more emotive," says the LGA's Lawrence. "But it sidelines the rest of the country. Not enough is being done for rural areas."

Andrew George MP, Liberal Democrat spokesman for rural affairs, adds: "The government seems to have become fixated on the South-east to the exclusion of other areas. It is not on top of the rural crisis."

A spokesperson for the Office of the Deputy Prime Minister counters: "We are making it easier for local authorities to limit the resale of ex-council housing in rural areas, so it is reserved for local people. As stated in the Communities Plan, we will deliver over 5000 affordable homes in villages alone over the next three years."

Campaigners are not convinced. They argue that more sites must be allocated for affordable housing through the planning system; councils should be able to charge full tax on second homes; funding for the Housing Corporation's rural programme must increase and there must be safeguards on the future use of publicly funded social housing, including the suspension of the right to buy in rural areas.