Chancellor Rachel Reeves has confirmed that £39 billion will be allocated to building social and affordable housing in England over the next decade.
The announcement came as part of the government’s Spending Review 2025, which sets out the government’s plans to invest in Britain’s renewal and deliver its Plan for Change.
Alongside the £39 billion for a new 10-year Affordable Homes Programme, the government has confirmed it will ‘catalyse’ additional private investment to further boost house building by confirming £4.8 billion in financial transactions from 2026-27 to 2029-30. Investment into infrastructure and land remediation will deliver new housing schemes in partnership with the private sector.
The government will also launch a permanent, UK-wide Mortgage Guarantee Scheme in July to ensure the consistent availability of mortgages for buyers with small deposits.
The plans were broadly welcomed by industry experts, although representatives for builders cautioned against losing sight of quality in the drive for quantity and called for strategic support with delivery.
RICS CEO Justin Young said the announcement was ‘significant’, adding:
“For too long, the housing sector has lacked the long-term certainty needed to plan and deliver at scale. RICS has consistently called for an increase in public investment to match the ambition of building 1.5 million homes, and this 10-year programme does just that.
“RICS also welcomes the focus on developing the energy infrastructure required to support energy security and grid decarbonisation, supporting economic growth.
“Importantly, this commitment provides the clarity and confidence that local authorities and the wider built environment sector need to get construction started and to invest in the people, skills and materials that will make this ambition possible.
“We now need to ensure this ambition translates into action, with the right enabling conditions in place from a well-resourced planning system to a skilled a workforce. RICS and our members are ready to support the delivery of high-quality, affordable homes for communities across the UK.”
Alex Slater, Rightmove’s housebuilding expert, also welcomed the ‘really positive’ news, which he said is a ‘step in the right direction’:
“There aren’t enough affordable homes, so we welcome any initiatives that will help the sector to deliver more of these homes to market. What will be key is making sure more affordable homes are delivered in the right places, where the gap in supply and demand is greatest. Hopefully this is one of many steps to come to support the delivery of much needed homes across the country.”
CPRE chief executive Roger Mortlock welcomed the news but called on the government to tighten up the definition of ‘affordable’ to take regional incomes into account.
“More cash for an Affordable Housing Programme is welcome and could make a real difference if it’s directed towards the escalating rural housing crisis. The way ‘affordable’ housing is defined, as 80% of market value, keeps many new homes out of reach for ordinary people, especially in the countryside. CPRE is calling on the government to redefine ‘affordable’ housing in line with average local incomes.”
The housebuilding industry responded with slightly more caution, with the National Housebuilding Council (NHBC) commenting:
“The target of 1.5m new homes by the end of this parliament is an ambitious one, which is why it’s important the potential of all tenures and all types of housing is maximised. The demand for affordable homes across the UK is acute, and it’s encouraging to see long-term targeted funding for this sector.
“At NHBC, we’ll be seeking to ensure new homes are built to the quality owners and occupiers should expect, and that this is maintained during any period of growth. This will pay dividends in the long-term, for the industry, for local communities and for home occupiers.”
Brian Berry, chief executive of the Federation of Master Builders (FMB) said SME builders ‘are ready to deliver’ new homes, but need a government-led strategy:
“The chancellor’s commitment to social housing needs an accompanying delivery strategy that puts SME builders at its heart. Small, local firms are uniquely positioned to unlock the potential of overlooked small sites, deliver high-quality homes, and boost local economies. By working in partnership with housing associations, SMEs can also help tackle the industry’s skills gap by training and employing people in their own communities.”
The news that the government will invest in AI to help deliver its ambitious housebuilding plans was met with relief by Andrew Lloyd, managing director at Search Acumen, who said:
“After years of under-investment, it’s really pleasing to see a commitment from government to ease the strain on the affordable and social housing sector, and it will take us one step closer to meeting our ambitious housing and constructions targets.
“A promising step forward in this year’s Spending Review is the decision roll out a new AI planning tool to digitally transform the planning system, a great development and something we’d been hoping to see for a while now. We hope this is the first step of many.”
