The government have described its commitment to a £2bn injection in house building as a “significant milestone” in efforts to build 1.5m homes during the Parliament. The money will be invested in 18,000 new social and affordable homes.
The Chancellor Rachel Reeves took the opportunity to announce the plans on a visit to an affordable housing site in Stoke-On-Trent ahead of the Spring Budget; it is the largest investment in affordable and social housing in a generation say the government.
“We are fixing the housing crisis in this country with the biggest boost in social and affordable housebuilding in a generation. Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people’s pockets. At the conclusion of the current Spending Review process on 11 June 2025, the government will announce further long-term investment into the sector in England, delivering the biggest boost to social and affordable housing in a generation.”
said Reeves.
The £2bn will be delivered in 2026/27 with all projects needed to have started by March 2027 and finished by June 2029. The funding will be made available to providers on the same terms as the Affordable Homes Programme for 2021-26, and will act as a bridge to the future grant programme to be announced at Spending Review; it is anticipated further funding will be allocated at this point.
Deputy Prime Minister and Housing Secretary, Angela Rayner added:
“Everyone deserves to have a safe and secure roof over their heads and a place to call their own, but the reality is that far too many people have been frozen out of homeownership or denied the chance to rent a home they can afford thanks to the housing crisis we’ve inherited. This investment will help us to build thousands more affordable homes to buy and rent and get working people and families into secure homes and onto the housing ladder. This is just the latest in delivering our Plan for Change mission to build 1.5 million homes, and the biggest increase in social and affordable housing in a generation.”
With calls for further support for first time buyers in the Spring Statement, Colleen Babcock, property expert at Rightmove points to sizeable increased in monthly mortgage and rental cost, as evidence of the need for further investment in affordable housing.
“We welcome the government’s focus and investment to help build more affordable homes. This first step towards more affordable housing is very much needed to help those struggling to save for a deposit and buy a home. Our data shows that a typical first-time buyer in Britain now faces average monthly mortgage payments of £940, a 59% increase compared with £590 per month five years ago. Over that same period rents have increased by 40% across Great Britain.
“We’re keen to learn more about how the government plans to use this first stage of their initiative to support first-time buyers, or any further incentives that could help more first-time buyers get their first step on the housing ladder.”
But critics have suggested the £2bn could be lower than the previous commitment by the Conservative party under the Affordable Homes Programme, launched in 2020 which was to provide £12bn five years according to the Financial Times. The critical element is the timing of the funding and which year it falls in.
Calling on the industry to ‘rise to the challenge’ Stephen Teagle, Chair of The Housing Forum said:
“This additional funding signals that the Government is listening to the sector and reaffirms its strong commitment to accelerating the delivery of much-needed affordable housing while driving economic growth. It represents an unprecedented intervention which, when paired with sustained, long-term investment, will be instrumental in meeting the growing demand for affordable homes.
Now, it’s up to the industry to rise to the challenge — accelerating delivery, building momentum towards the government’s target of 1.5 million new homes, and ensuring we provide the housing this country urgently needs.”
Kate Henderson, Chief Executive at the National Housing Federation, welcomed the funding saying
“This funding… demonstrates the government’s commitment to delivering genuinely affordable, social housing for families in need across the country. The additional £2 billion will prevent a cliff edge in delivery of new homes, ahead of the next funding programme being announced. Social housing is the only secure and affordable housing for families on low incomes, and the dire shortage has led to rocketing rates of poverty, overcrowding and homelessness. Investment in social housing is not only key to tackling the housing crisis, but is also excellent value for money, reducing government spending on benefits, health, and homelessness as well as boosting growth. Housing associations are ready to work with the government to deliver a generation of new social homes.”
Charlie Nunn, CEO, Lloyds Banking Group added:
“A safe and lasting home is the foundation for good lives and livelihoods, and we welcome this boost to building much-needed social and affordable homes. As the UK’s biggest commercial supporter of social housing, we’re working across the private, public and community sectors to help increase provision of good quality, genuinely affordable housing for those in need.”
David Thomas, CEO at Barratt Redrow concluded:
“To increase construction activity and build the homes the UK desperately needs, we need support for demand across all tenures. As well as providing more much-needed affordable homes, this welcome investment will help unlock mixed-tenure developments and to create jobs and economic growth across the country.”
