Chancellor confirms £500m for Affordable Homes Programme and five-year rent settlement

The Treasury also confirmed that Right to Buy discounts will be reduced to protect existing social housing stock so that “thousands more council homes” remain in the sector. England’s existing social housing supply is depleted every year by the scheme, while also disincentivising councils to build new social housing.

Discounts will be reduced alongside greater protections for newly built social housing and councils will be able to keep 100% of the receipts generated by a Right to Buy sale.

The £500m investment is a top-up to the existing AHP, which runs from 2021-26 and was set by the previous Conservative administration.

The Treasury also confirmed Inside Housing’s reporting from September that the next multi-year AHP will be announced in Spring 2025.

A new government housing strategy is due “in the Spring”, it said. This will set out details of new investment to succeed the 2021-26 AHP at the Spending Review, which sets out spending for government departments for the next three years.

This new multi-year Labour AHP will “lay the foundations for the manifesto commitment to deliver the biggest increase in social and affordable housebuilding in a generation”, and to support councils and housing associations to “build their capacity and make a greater contribution to affordable housing supply”.

It will deliver a mix of homes for sub-market rent and homeownership, with a “particular focus” on delivering homes for social rent.

Ms Reeves said: “We need to fix the housing crisis in this country. It’s created a generation locked out of the property market, torn apart communities and put the brakes on economic growth.

“We are rebuilding Britain by ramping up housebuilding and delivering the 1.5 million new homes we so badly need.”

Deputy prime minister and housing secretary Angela Rayner said: “This is a further significant step in our plan to get Britain building again, backing the sector, so they can help us deliver a social and affordable housing boom, supporting millions of people up and down the country into a safe, affordable and decent home they can be proud of.”

Kate Henderson, chief executive of the National Housing Federation, said: “We strongly welcome the £500m top-up to the AHP. This vital injection of funding, which we’ve been urgently calling for, will support housing associations to continue to deliver much needed affordable homes in the immediate term and prevent a collapse in delivery.”

She added: “We welcome a consultation on a new rent settlement. This will provide both transparency for residents and long-term certainty and financial stability for social housing providers. We also support the government’s decision to review Right to Buy discounts.

“We look forward to a new long term housing strategy announced at the next Spending Review, including a significant boost in funding for social housing.”

Rachael Williamson, head of policy and external affairs at the Chartered Institute of Housing, said: “We agree with the government that we need to fix the housing crisis and strongly welcome its commitment to increase investment in affordable and social housing in the forthcoming Budget and subsequent Spending Review.

“The £500m top-up to the AHP is essential for maintaining momentum and keeping the programme running in the immediate term, ahead of the new funding needed in the spring.

“This focus on creating new affordable social homes, alongside measures to improve and protect existing ones through Right to Buy reforms and increased rent stability, which we’ve long called for, represents a positive step towards tackling our broken housing system. Long-term certainty is essential for the social housing sector to effectively plan and invest so the introduction of a 5-year rent settlement is welcome. However, to fully support effective planning and sustainable investment, a 10-year settlement is needed.”

Clare Miller, chief executive of Clarion Housing Group, said: “We welcome the announcement of additional funding and this government’s commitment to long-term rent certainty for the social housing sector… We have in excess of 20,000 new homes in our development pipeline and a long-term rent settlement will give us the certainty we need to deliver these.

“Major investment in social housing via the AHP will mean more affordable homes for those that desperately need that safe and secure foundation.”

Polly Neate, chief executive of Shelter, said: “This boost in funding is a welcome step towards tackling the housing emergency. To get a grip on rocketing homelessness, the vast majority of this funding needs to be focused on social rent.

“If the government is to reach its target of building 1.5 million homes, it must now use the Spring Spending Review to deliver 90,000 social homes per year for 10 years. Not only will these pay for themselves through new jobs and savings for the NHS and benefits bill, they’ll finally end homelessness for good.”

Charlie Nunn, chief executive of Lloyds Banking Group, said: “As the biggest supporter of social housing in the UK, we welcome the announcement of the funding boost for the AHP and the plans to consult on a long-term social housing rent settlement.”

Louise Gittins, chair of the Local Government Association (LGA), said: “We are pleased the government has acted on our call to increase AHP funding… This will boost councils’ ability to build desperately-needed affordable housing for local communities.

“The LGA has long-called for reform to Right to Buy and these positive measures will support the replacement of sold homes and to stem the continued loss of existing stock.”

A five-year rent settlement is a “step in the right direction” in providing certainty for councils on rental income, but “to really strengthen and provide stability to Housing Revenue Accounts, a minimum 10-year rent settlement is needed”, Ms Gittins added.

Darren Baxter, principal policy advisor (housing and land) at the Joseph Rowntree Foundation, said: “Investing in building social homes will make a real difference to the lives of people who are currently locked out of the economic security these homes could give them.

“It’s welcome to see that alongside this investment, the government plans to take steps to reduce the number of homes lost to the private sector through the Right to Buy discounts. Taken together, these measures are a very positive move towards ensuring everyone has a decent and affordable home, and a hopeful sign for more investment in the future.”

Nicholas Harris, chief executive of Stonewater, called the measures “brilliant” but said to further bolster the AHP, the government ought to extend it “on a long-term basis to allow for longer-term, larger delivery programmes”.

He also urged the government to adopt a “cap and collar approach” to the social housing rent settlement. This would “ensure the sector has guarantees that rental increases would never fall below a certain percentage, but also reassures customers that rents cannot increase beyond a certain overall cap”.

The government also confirmed £128m of funding for brownfield remediation projects, some of which had been previously announced. These include a £56m investment at Liverpool Central Docks, which is expected to deliver 2,000 homes in North Liverpool and a £25m investment in a joint venture to establish a new fund with Muse Places and the Pension Insurance Corporation to deliver 3,000 new homes across the country, with a target of 100% of these being affordable.

In addition, £47m will be granted to local authorities to tackle pollution in rivers, which has halted housebuilding in highly polluted areas. This funding could support the delivery of an estimated 28,000 homes that cannot be built currently due to these restrictions.

Ahead of the Budget on Wednesday, four housing and homelessness organisations wrote to Ms Reeves and Ms Rayner calling for a “significant increase” in investment for social housing.

The Chartered Institute of Housing, National Housing Federation, Crisis and Shelter said the joint approach is to “reiterate the crucial importance of a significant and early increase in investment in providing affordable homes, particularly social rented homes”. 

The letter concluded: “Significant new investment is needed, both in this week’s Budget in relation to the current Affordable Homes Programme, and in the Spring Spending Review in relation to a new, and more ambitious, 10-year Affordable Homes Programme with social rent at the heart of it, to begin in April 2026.”