The chancellor will announce that government spending on affordable housing will almost double as part of today’s (11/6) spending review.
Rachel Reeves will commit to £39billion worth of grants to be spent over 10 years, a significant increase on the £2.5billion annual allocation in the 2021-26 Affordable Homes Programme and the largest investment in social and affordable homes in a generation.
It was reported yesterday that the chancellor would announce £25billion dedicated to affordable housing, but it now appears that ongoing negotiations between housing secretary Angela Rayner and Reeves have resulted in a better deal for the housebuilding industry and greater funds to tackle the housing crisis.
The Treasury has also confirmed a new 10-year rent settlement that will permit social rents to increase by the Consumer Price Index plus 1% a year. The industry has been calling for the government to increase its original five-year proposal, which had been its preferred option last year.
The government has also said that it will consult on how it can reinstate rent convergence, which has been long called for by social housing providers. This policy would ensure better alignment between rents on different properties, allowing cheaper rents to be raised more quickly. The G15, the group of London’s largest housing associations, has estimated that the removal of the policy in 2015 has cost its members £2billion.
A government source said: “We’re turning the tide against the unacceptable housing crisis in this country with the biggest boost to social and affordable housing investment in a generation, delivering on our commitment to get Britain building.”
Kate Henderson, the chief executive of the National Housing Federation, called the boost to affordable housing “the most ambitious affordable homes programme in decades”.
She added: “This is a transformational package for social housing and will deliver the right conditions for a decade of renewal and growth.”
Rico Wojtulewicz, head of policy and market insight at the National Federation of Builders and the House Builders Association (HBA), commented: “This is fantastic news. It shows that the government realises it must be a key player in addressing the housing crisis and building the social homes of tomorrow.”
“This decision benefits stakeholders across the industry. From contractors, who will deliver the social and affordable homes for councils, and housebuilders who have seen a drop off in housing associations purchasing their affordable homes. To Homes England, who are tasked with increasing affordable housing supply, and councils who are struggling to fund projects due to rising construction costs and viability challenges.”
“The UK has become an international outlier in the delivery of affordable housing, in part because it has become politically expedient to blame private developers for not building the homes that the public sector should have been building. We therefore hope that the government now uses its New Towns and Compulsory Purchase Order (CPO) policies to build the social and affordable homes that councils chose not to build when interests rates were almost at zero.”
Mairi MacRae, director of campaigns and policy at Shelter, said: “This increased investment is a watershed moment in tackling the housing emergency. It’s a huge opportunity to reverse decades of neglect and start a bold new chapter for housing in this country.”
