Sector responds positively to the package, which also features a 10-year rent settlement and a consultation on rent convergence.
In a brief statement issued last night, the Treasury confirmed that the Chancellor will unveil a £39bn, 10-year Affordable Homes Programme (AHP), a figure far exceeding expectations and well above the £25bn reportedly being considered by Rachel Reeves earlier in the week. The new funding represents an average annual grant rate of £3.9bn, significantly higher than the roughly £2.5bn allocated under the current 2021–2026 AHP, including previous top-ups.
Alongside the funding, the Treasury also announced a 10-year rent settlement, double the five-year term the government had previously supported, with rent increases allowed at CPI plus 1%. In addition, a consultation will be launched on the reintroduction of rent convergence.
Further details on the funding package and related housing measures are expected to be announced later today.
The unexpected announcement has been met with enthusiasm from across the social housing sector.
Kate Henderson, chief executive of the National Housing Federation, described the combined funding and rent settlement as a “transformational package for social housing” that will “deliver the right conditions for a decade of renewal and growth.”
She added: “This is the most ambitious Affordable Homes Programme in decades and alongside long-term certainty on rents, will kickstart a generational boost in the delivery of new social homes.”
Rachael Williamson, director of policy, communications and external affairs at the Chartered Institute of Housing, said the announcement “shows the power” of the sector’s “collective voice.”
She noted: “It may not be all that we asked for in our spending review submission but it’s nearly double the annual funding of the previous programme. And if focused on social rent, it could have a transformational impact – helping thousands of families without a safe and secure home.”
Clare Miller, chief executive of Clarion, called the scale and duration of the funding a “game changer” for families on the lowest incomes.
“Long-term, reliable subsidy is the only way to keep new rents genuinely affordable while covering the rising costs of land, labour and materials.
“For the first time in living memory, housing associations have ten years of certainty. That gives us the confidence to borrow, build and invest at scale—unlocking sites that simply don’t stack up without grant and protecting every pound of residents’ rent for services and maintenance.”
Nick Harris, chief executive of Stonewater, echoed this sentiment, saying: “It is hugely reassuring to see long-term funding for affordable homes of £39bn.
“This programme has been instrumental in helping Stonewater deliver thousands of much-needed homes across the country, including some developments with over 100 affordable homes. Support for this work must continue to give housing providers like us the confidence to plan long-term, invest in ambitious developments and deliver the homes communities urgently need.”
He also welcomed the new inflation-linked rent settlement, describing it as offering “greater financial stability and certainty.”
Fiona Fletcher-Smith, chief executive of L&Q, stated: “The £39 billion Affordable Homes Programme, coupled with a 10-year rent settlement, gives housing associations like ours the certainty to plan, build and invest.
“We’re encouraged by the consultation on rent convergence and urge the government to bring it forward quickly.” Fletcher-Smith also expressed hope for further steps, including access to the Building Safety Fund for social landlords.
Southwark Council leader Kieron Williams called the funding package and rent settlement the “kind of bold, radical action that our country so badly needed.”
He said: “This is a turning point for communities across our country. It will lift thousands of families out of homelessness and overcrowded homes, and will give councils the certainty and income we need to raise standards in our existing council homes too.
“We are delighted that the government has listened to our call from our coalition of 112 councils. We can now work to turn the tide on the housing crisis that has held so many lives back.”
Melanie Leech, chief executive of the British Property Federation, said: “With really tough choices to be made in the spending review we are delighted that the government has prioritised the delivery of affordable and social housing and that it is investing significant additional sums to support a sector that has faced tough headwinds in recent years.”
She described the 10-year rent settlement as a “significant step forward to help the sector to plan with more certainty and to help unlock the huge amount of long term private capital such as pension funds, that wants to invest in genuinely affordable homes.”
Stephen Teagle, chief executive of partnerships and regeneration at Vistry Group, said the funding will have a “transformative impact” on the company’s ability to deliver affordable and mixed-tenure housing.
He added: “It is great news for our partner housing associations and local authorities, great news for the economy and great news for the thousands denied access to an affordable home.”
Greg Reed, chief executive of Places for People, said the combination of funding and the 10-year rent settlement “will drive real momentum to meet the government’s 1.5 million homes target.”
However, he noted that “more can be done to further strengthen the sector’s financial capacity.”
Paul Hackett, chief executive of Southern Housing, said “the AHP increase won’t help with ‘Southern’s limited EBITDA-MRI cash interest cover’” unless there is a meaningful increase in the grant rate per unit. The G15 landlord has currently paused new development over concerns it could breach interest cover limits.
Nevertheless, Hackett added: “However if building safety funding is extended to social and affordable rented homes this would be a game changer.”
The Treasury’s Tuesday night release made no mention of reported proposals to redesignate Homes England as a “public finance institution”—a move insiders have dubbed a “housing bank”—which would enable it to generate financial assets through major investments or large-scale lending.
This change, if implemented, could potentially allow Homes England to provide more direct financing to the housing sector and reduce capital costs for developers.
The release also omitted any reference to possible plans to reclassify housing as critical infrastructure.
