Yvette Cooper has distanced herself from a Pathfinder housing scam that has allegedly enabled developers to pocket £35 million by snapping up homes earmarked for regeneration.
The Sunday Times
reported that speculators are cashing in on Hull's Pathfinder regeneration push by securing rows of Victorian terraces at bargain prices.
The properties are then apparently sold to government regeneration agencies at hugely inflated prices, and later demolished to make way for affordable housing.
But Cooper said reports of a multi-million housing scam are 'misleading'.
She said: 'The Pathfinder scheme is already routinely assessed by the Audit Commission. Where these properties are changing hands because speculators are moving in, councils need to move fast to complete Compulsory Purchase Orders to prevent speculation.'
The houses fall inside the Department for Communities and Local Government's (DCLG's) £1.2 billion Pathfinder zones, which aim to regenerate housing in nine of the UK's poorest regions, including Birmingham and South Yorkshire.
The DCLG insists decisions on local Pathfinder schemes are made by local councils and Pathfinder officials, and stresses that there are strict guidelines for acquiring properties.
But it has warned councils to 'move fast' to complete Compulsory Purchase Orders to help stifle speculation.
A DCLG spokesman said: 'There are standard requirements for local authorities that they should not pay more than the market value. We have also made clear that only residents who have been living in properties for a significant period of time should be eligible for compensation.'by Clive Walker