THE chairman of Scottish Homes, Sir James Mellon, said yesterday that

housing association were setting standards for public and private

housebuilding.

Sir James was speaking at the opening in Glasgow, of an exhibition, by

the Scottish Federation of Housing Associations, to mark National

Housing Week. ''The kind of housing you are building is without doubt

the very best in Scotland, and sets the standard that Scots ought to

demand,'' he said.

They were also providing commitment towards solving the housing

problem, and providing choice, particularly for the mentally handicapped

and elderly. Housing associations were doing much more than getting

value for money -- they were setting an example.

Mr John Scott, vice chairman of SFHA, said that the achievements of

housing associations and co-operatives had demonstrated that they were

equal to the challenge of improving housing conditions, and meeting real

housing needs.

The Government wanted to see the work of associations and

co-operatives expand and develop, but it wanted more for its money -- a

15% increase in output for the same level of investment this year.

''The real challenge is for the Government, through Scottish Homes, to

allow associations and co-operatives to improve conditions and provide

houses, at rents which are affordable to traditional client groups,'' he

said.

Mr Scott said the chief executive of Scottish Homes had been quoted as

saying that rents would have to rise to ''a realistic level.'' The

SFHA's ''Who do we house?'' survey in 1987 showed that more than half

the households interviewed had a net income of less than #60 a week.

He went on: ''Scottish Homes has yet to give us the confidence that

their desire to ensure maximum output, for the level of investment

available, will not result in a numbers' game. What is required is

investment that not only provides the quality, but at a cost that those

who are in greatest housing need, can afford.''