Community groups stand to lose out on £200,000 worth of annual grants to ensure vital social housing continues to be built in north Norfolk.

Victory Housing Trust is battling to absorb the impact of the government's summer budget announcement which will see a one percent reduction in rent for housing association tenants from April for four years.

The measure will leave Victory, which has nearly 5,000 homes across the district, with a £7.2m hole in its finances over the four-year period.

But Victory chief executive John Archibald has pledged that the trust will not plug the gap by cutting back on its house-building programme which sees about 100 new homes built each year.

Instead, Victory will axe its popular community grants fund which dishes out sums of up to £25,000, totalling some £200,000 a year.

Recipients have included youth groups, village halls and organisations such as North Norfolk Community Transport.

Victory will also save about £1m a year by reducing its £11m annual maintenance and improvements programme, which will mean tenants facing longer waits for new kitchens, bathrooms and central heating systems.

Mr Archibald said Victory provided a 'platinum service', well above the national average, and it would still be better than the government's Decent Homes standard.

And the trust also plans to trim £300,000 to £400,000 a year from its management costs through 'multiple small savings' which would not lead to any job losses among its 75 staff, based at Victory's North Walsham headquarters, he added.

North Norfolk District Council had 2,258 people on its housing waiting list this week, 164 of whom were considered to have a high level of housing need. Statistics show that an average of 69 people express interest in each new affordable home.

'There is a very pressing need for affordable housing in north Norfolk,' said Mr Archibald. 'It's critically important that we expand our operations at a time when demand is high.'

Victory has 193 homes under construction at present.

The National Housing Federation, umbrella body for housing associations, has warned that the rent reduction requirement will: 'make it more challenging for associations to deliver new homes.'

North Norfolk MP Norman Lamb said the cumulative effect of such government policies, including the extended right to buy, was very worrying.

'In north Norfolk there is an acute shortage of social housing and buying is beyond the means of most people. I support Victory in its decision not to cut back on its house-building programme,' he added.

Matt Townsend, chief executive of North Norfolk Community Transport (NNCT), said Victory had donated £50,000 last year. He recognised that funders were having to tighten their belts and was confident they could meet the challenge of fewer grants.

'The support we have had from Victory has been amazing and has helped us to get to the strong position we are in now,' said Mr Townsend.