Homeless people are being denied access to affordable housing because social landlords are routinely excluding prospective tenants who are deemed too poor or vulnerable to pay the rent, a study has revealed.

Research by the Chartered Institute of Housing (CIH) found that “screening out” of homeless applicants nominated for newly available lets was widespread, as housing associations and local authorities increasingly ration their shrinking stocks of social homes.

In many cases nominees were refused a home because of the likelihood they would accrue major rent arrears after moving on to universal credit, because of the probability they would be hit by the bedroom tax or because the benefit cap had made them a financial risk.

Others were rejected after social landlords identified they had unmet mental health or addiction problems, often because of cuts to local NHS and housing support services. Individuals with unmet support needs were regarded as “too high a risk to tenancy sustainment”, the CIH said.

Some housing associations demanded that prospective tenants who would be moving on to universal credit pay a month’s rent up front, an impossible requirement for many homeless people. Landlords have been badly hit by rent arrears caused by tenants’ five-week wait for a first universal credit payment.

Homeless people were at risk of being caught in a “catch-22 scenario”, the CIH said, with some landlords’ letting practices creating a “perverse situation where the reasons why people may need access to social homes the most can often become barriers to accessing them”.

Faye Greaves, the CIH policy and practice officer, who wrote the report, said: “For decades, we have failed to build enough homes, and our welfare safety net is no longer fit for purpose. More and more people are turning to local authorities and housing associations for help to access social housing.

“But that leaves housing providers having to find a balance between people in acute need, local priorities and their need to develop sustainable tenancies. What we found is that relying solely on processes can end up having the opposite effect to that intended.”

It called on ministers to launch a major social housing building programme and scrap right to buy. There has been a net loss of 165,000 social homes in England since 2012, the CIH estimates. It adds that 90,000 of the 340,000 new homes needed every year should be set at social rent. In 2017-18 only 6,434 homes were built for social rent.

The findings will concern critics who believe some housing associations are becoming increasingly estranged from their charitable mission to house homeless people. Many were set up in the late 1960s on a wave of public outrage over growing homelessness typified by the famous BBC drama Cathy Come Home.

Jon Sparkes, the chief executive of Crisis, called for proper scrutiny of social landlords’ letting practices: “Having a safe and stable home is a human need, and this report paints a sorry picture of the difficulties that people who are homeless, or who are at risk of becoming homeless, face in accessing this basic right.”

Pre-tenancy screening is causing tension between housing associations, which want to minimise the damage to their balance sheet of taking on tenants at risk of rent arrears, and councils, which want to exercise their right to nominate social tenancies to reduce growing numbers of homeless people on their books.

The research did not ask what happens to homeless people who are refused social tenancies but the assumption is that most will continue to be housed in high-cost and often unsuitable temporary accommodation in the private sector. Local authorities in England spend nearly £1bn a year on temporary accommodation.

In recent years cuts to government grant funding have meant housing associations have adopted more commercial, profit-orientated approaches, resulting in some being accused of concentrating on building homes for private sale and “affordable rent” at the expense of the people they were set up to help.

The National Housing Federation, which represents housing associations, said its members were committed to providing homes for those most in need and on the lowest incomes but action was needed to reverse the “dire shortage of social rented housing caused by decades of underinvestment”.

David Bogle of Homes for Cathy, a group of housing associations dedicated to restoring the sector’s commitment to ending homelessness, welcomed the report. “Housing associations and local authorities need to be given additional support to develop new social homes and to allocate those homes to those who are homeless and in greatest need.”

A spokesperson from the Ministry of Housing, Communities and Local Government said: “Everyone should be able to have a safe and secure home, including social tenants who are homeless or have high unmet needs.

“Our reforms have increased the amount of social housing stock by 79,000 since 2010, while the social housing waiting list has decreased by 40%.

“We will continue to tackle the stigma surrounding tenants on benefits and ensure more social homes are built to provide quality and fair social housing for those that need it.

“We are disappointed if housing associations are doing this and we will see what can be done at a national level to address this.”