Budget confirms £500 million in additional funding for the Affordable Homes Programme and a five-year rent settlement for social housing providers

On 30th October 2024, the Chancellor Rachel Reeves gave her first Budget and announced new measures to deliver more affordable housing and ensure the availability of social housing to those who require it. These measures are designed to support the government’s target to build 1.5 million new homes during the current Parliament.

Sam Gorrell, Jessica Crosland and Jasmine Banarse consider some of the impacts of the Labour Government’s first budget’s on the Social Housing Sector.

£500 million in additional funding for the Affordable Homes Programme

A £500 million boost to the Affordable Homes Programme brings the total investment in housing supply to over £5 billion in 2025-26. This supports the delivery of 33,000 new homes across the country by funding an additional 5,000 homes.

The Chartered Institute of Housing (CIH) stated that this increase reflects a strong understanding of the sector’s urgent needs, allowing social housing providers to plan projects that would otherwise be at risk of delay or underfunding.

The government will announce future grant investment to encourage investment in affordable housing by social housing providers at Phase 2 of the Spending Review, which details Government spending plans for the next three years.

Funding for new affordable housing projects

An additional £128 million has been allocated for new affordable housing projects. This targeted funding demonstrates the government’s emphasis on expanding the availability of affordable homes in areas with high housing demand and limited affordable options.

The funding focuses on constructing additional units and ensuring quality, a critical factor in long-term housing stability. The Chartered Institute of Housing (CIH) considers this an essential step towards addressing social housing shortages across urban and suburban regions.

Five-year rent settlement for social housing providers

The consultation on a new 5-year social housing rent settlement of CPI+1% will increase the existing stock of social housing and give social housing providers the “long-term certainty” necessary to allow them to invest in new social homes. This is designed to give both tenants and housing providers financial predictability, stabilising rent costs and enabling providers to forecast budgets for essential housing services. The government plans to consult on whether a 10-year settlement may provide additional certainty.

Existing social housing stock will also be protected by a reduction of discounts under the Right to Buy scheme, and by allowing councils to retain sale proceeds. This is intended to ensure that councils can reinvest proceeds in new homes or maintaining current stock, supporting growth and sustainability within the sector. This builds on similar previous rent frameworks but marks a shift towards long-term planning and financial predictability for both providers and tenants.