UK chancellor Rachel Reeves has announced a £39bn (€46.1bn) cash injection into social and affordable housing – the biggest investment in the sector by the British government in 50 years as part of her multi-year UK spending review.
Speaking in the House of Commons, Reeves revealed that the government would invest £39bn in affordable housing over the next 10 years.
“Our planning reforms have opened up the ability to build, now we must act to make the most of the opportunities,” Reeves said.
The Treasury claimed that the billions earmarked for affordable homes over the next decade marked “the biggest boost to social and affordable housing investment in a generation”.
Reeves’s announcement largely welcomed
James Barrett, head of affordable housing at BNP Paribas Real Estate, said: “Today’s Spending Review delivers a powerful one-two punch for the UK’s housing crisis, placing planning reform and affordable housing squarely at the heart of the government’s growth agenda.
“Confirming a new 10-year £39bn Affordable Homes Programme is a significant step in the right direction towards transforming the fortunes of the social housing sector. This new programme amounts to £3.9bn of funding a year on average, which is a significant increase on the £2.5bn allocated under the existing programme, taking account of recent top-ups.
“This certainty around the AHP comes on top of confirmation of a 10-year social rent settlement which will see rents rise at CPI+1% a year from 2026 and consultation will follow on how to implement social rent convergence. A longer-term rent settlement and rent convergence have long been fundamental asks of the sector and this news, coupled with the AHP certainty will kick-start a generational boost in the delivery of new social homes.”
Solid financial foundations for the sector
Barrett added that the measures announced by Reeves are “vital in creating a solid long-term financial platform for the sector which will in turn draw in additional capital”.
He said: “[The government’s] flexible, long-term capital model is well-placed to weather economic volatility and respond to shifting local authority needs. This additional and significant flow of capital into the sector is what is desperately needed to help drive a sustained and significant upturn in social housing delivery.”
Investors need to act
Ali Farrell, head of impact strategies, real estate, L&G, said: “We welcome this ambitious package for a much-needed expansion of affordable housing investment. It is now time for investors to act.
“For investors, this is a prime opportunity to engage in a long-term strategy that treats housing as essential infrastructure and channels funds into assets that will provide them with a positive social impact. L&G is a strategic partner of Homes England and has a leading track record in affordable housing delivery. We are ready to swiftly work with the government and deploy investor capital, creating new homes for those most in need.”
Have planning reforms gone far enough?
Caroline McDade, head of national planning at BNP Paribas Real Estate said: “Crucially, this investment is twinned with decisive planning reforms. The Office for Budget Responsibility (OBR) forecasts that changes to the National Planning Policy Framework – reintroducing mandatory housing targets and modernising green belt policy for low-quality ‘grey belt’ land – will lead to an additional 170,000 homes and boost real GDP by 0.2% by 2029-30, all with “no fiscal cost”. This underscores the government’s belief that bureaucratic hurdles, not just funding, have been a major drag on delivery.”
To ensure these reforms translate into spades in the ground, £46m was earmarked to boost local planning authority capacity, including training 300 new planners, but McDade argues that this may not be sufficient.
She said: “This is only a fraction of what is needed, when also accounting for low statutory consultee resource. Wider government department cuts are likely to impact local authority budgets, leaving planning reliant on this limited funding stream and planning application fees.”
“For developers and housing providers, the message is unambiguous: the pathways for delivery are being cleared, and the capital is being committed. The challenge now is to leverage these policy shifts and substantial investments to build the homes the nation desperately needs.”
Boost to SME builders
Paul Rickard, chief executive at Pocket Living, said: “The measures announced today by the chancellor are very welcome, especially the additional financial investments available to Homes England allowing enhanced financial support for our struggling SME house-building sector, alongside increased flexibilities within that funding allowing us to innovate together.”
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