Homes England opens up grant funding for regeneration projects

All schemes must start on site by 31 March 2025 and will need to complete within the AHP’s current timeframes.

Mr Denton acknowledged it was “a short window”, given the timing of the current AHP, but said there was “definitely a window of opportunity to demonstrate and get the financial support”.

The change, agreed with the Department for Levelling Up, Housing and Communities, comes after a campaign from housing associations keen to redevelop outdated or substandard stock and engage in wider placemaking.

However, the agency has retained its ‘additionality’ requirement, which some providers had argued should be relaxed. As a result, regeneration projects that do not plan to increase the current number of homes will not be eligible for grant funding.

Homes England said there was no set proportion of additionality to qualify for funding and providers were urged to come and talk to the agency, even if their current proposals did not have it.

“We do want to try and challenge people, typically through densification, to see both the replacement of existing homes as well as the provision of new,” Mr Denton said. “My own experience suggests there’s plenty of opportunities whereby you can do both in the same place.”

Providers can apply through Homes England’s continuous market engagement route, while existing strategic partners will be able to use grants already allocated to them, the agency said.

Homes England is keen to see proposals that can deliver at pace, maximise the number of new affordable homes and enhance efforts to level up and regenerate communities. It will run an evaluation to measure the success of the change, which it sees as a “proof of concept”.

The agency said the increased flexibility aligned with its five-year strategic plan, published in May, which placed a greater focus on regeneration. Homes England is planning to refer to itself more prominently as the government’s housing and regeneration agency.

In March, Homes England updated its AHP guidance in response to “changing market conditions”, introducing social rent-specific grant rates alongside the ability to target market sale acquisitions.

Grant funding from the AHP is still available to those looking to only build new homes.

Mr Denton said: “The affordable housing sector has always had to balance the investment it makes in existing homes with the investment it makes in building new homes. Over the past year, increasing financial pressures have made achieving that balance even more difficult to manage.

“This change is something the sector has been calling for, and with it there is a real opportunity to accelerate the regeneration of social housing and help level up communities across the country.

“We’ll be working quickly to make this funding available, to ensure partners can get the maximum benefit from this change, and are ready to use all of the tools, capacity and capability we have available to us to support delivery.

“We encourage all affordable housing providers and local authorities to come and talk to us as early as possible if they need support to develop their proposals. We’re here to help.”

Responding to the news, Kate Henderson, chief executive of the National Housing Federation (NHF), said: “This announcement is hugely welcome. The National Housing Federation has been making the case for years that grant funding rules must be amended to allow housing associations to replace existing homes, and was a central pillar of the recommendations we made to the government in the Joint NHF and CIH Action Plan in response to the Better Social Housing Review published in May.

“For too long housing associations have simply not had access to the funding needed to replace social homes that are no longer fit for purpose. Our sector is absolutely committed to improving the quality of our homes and this announcement will enable us to work in partnership with the government to do this vital work.

“Ultimately we believe that regeneration, as well as the delivery of much-needed new social housing, should be central to a long-term national plan for housing. We urge all political parties to commit to building far greater numbers of social homes.”

Steve Coffey, chair of Homes for the North, said: “Introducing more flexibility to the Affordable Homes Programme in this way will unlock a new wave of regeneration across the North and elsewhere in the country. This is a hugely positive step forward and something that Homes for the North has campaigned for over the last three years.

”Our previous campaign to remove the 80:20 rule from Homes England grant funding was also successful and has resulted in a larger share of AHP grant funding coming to the North. Now this new change will help housing associations take a whole-place approach to regenerating communities and providing more and better homes.

“We look forward to working with Homes England and other partners in helping regenerate communities across the North.”

Cather Ryder, CEO of PlaceShapers, called the news “very welcome." She said: "While we have been working hard to improve the energy efficiency and quality of our homes, some of them need to be knocked down and rebuilt as they have far exceeded their intended lifespan. The lack of funding to regenerate existing homes, estates and communities has hampered the efforts to bring social housing up to the standards that we aspire to.

"The change to the funding rules meaning grant can now be spent regeneration will help our members deliver projects that could transform places and communities, making them more socially and economically resilient.”

Fiona Fletcher-Smith, chair of the G15 and group chief executive of L&Q, said: “Replacing outdated homes as part of wider estate regeneration is a vital part of solving Britain’s housing crisis, so we very much welcome today’s announcement.

“Regeneration that is done well can transform lives and communities, but it is crucial that residents are fully consulted, buy in to proposals and are engaged throughout the process.

“We look forward to proactive discussions with Homes England to understand the details of this very positive announcement, and how we can work together going forward.”