The June 2025 Spending Review signals the most significant public investment in affordable housing for a generation, underpinned by a £39 billion, 10-year Affordable Homes Programme and a new long term rent settlement. While the headlines offer welcome certainty for Registered Providers, the detail and delivery will demand careful navigation, and the Prospectus is yet to be released… watch this space!
The anticipated emphasis on social rent, phased bidding rounds, rent convergence, and place-making regeneration, all points to a step-change in how Providers will plan, partner and deliver over the coming decade… though from our experience in the housing, public and wider built environment sector we have already seen great examples of new operating models focussed on regeneration and partnerships and truly feel this is an exciting time for the housing sector to make a historic change!
Headlines
- £39 billion of capital grant (including the £2 billion bridge funding in 2026-7) will be allocated over 10 years (2026–36) for social and affordable housing, in comparison with the current Affordable Homes Programme (£12.3 billion over five years), the amount of grant under the new scheme is almost double.
- 10-year rent settlement confirmed (CPI+1% annual increase from April 2026) and imminent consultation on social rent convergence, enabling long-term income modelling. This follows years of persistent lobbying by the sector to enable RPs to have access to more funding and unlock long-term plans, as we know is required for large-scale regeneration.
- £2.5 billion in low-interest loans to support affordable housing development and complement commercial lending.
- £1 billion Building Safety Fund has finally been opened to social housing providers.
- £950 million top-up for the Local Authority Housing Fund to expand temporary accommodation, and of course the commitment to remove the Vagrancy Act 1824 from law next year (which makes it a criminal offence to be homeless). Collectively, are a huge step in the direction of travel towards tackling the homelessness crisis.
- Re-commitment of £13.2 billion over five years for the Warm Homes Plan with a focus on reducing bills and accelerating net zero.
- Regional targeting: RPs will be incentivised to build in regeneration priority areas, especially in the North, Midlands, and key urban extensions.
- Scheme eligibility will be tied to minimum quality standards, mixed-tenure integration, and evidence of local authority support or need, clearly highlighted by Matthew Pennycook MP’s letter to RPs following the spending review.
What does the Spending Review mean for RPs?
- 10-year funding certainty gives RPs unprecedented scope to plan and deliver – particularly useful for complex estate regeneration, brownfield, urban regeneration and multi-phase schemes which under the previous programme were deemed too complex for a five-year funding cycle. The grant draw-down is expected to be in phases, with bidding rounds likely every two to three years. Details on grant clawbacks or underspend tightening will emerge in the Prospectus later this summer- watch this space…
- Rent settlement supports stronger income forecasting, more secure debt financing and joint ventures and risk management – effectively helping RPs to re-build their financial capacity. Places for People calls this “transformative” and funding “drives real momentum”. However, RPs should remain cautious; previous rent settlements have been altered mid-cycle, and future economic or political shifts could test this commitment. Detail is awaited on protections in this case- watch this space…
- Social rent prioritisation is expected in the forthcoming Prospectus, aligning with delivery need – but may impact scheme viability, particularly where cross-subsidy models have supported affordable or shared-ownership units. In addition, given the higher than anticipated investment in the NHS, the Prospectus may focus more on creating healthy communities also, which will of course result in a saving for the NHS- watch this space…
- Rent convergence consultation is due, aimed at addressing inconsistencies with rent levels – positive for income parity but potentially complex for providers managing mixed-tenure or legacy stock- watch this space as the final decision will be announced in the autumn budget
- Increased delivery ambition is expected, with the 10-year funding framework designed to support larger, more strategic programmes. The scale of investment implies an expectation that RPs will accelerate development where capacity allows, and RPs are expected to scale-up internal capacity to facilitate. The ambition of the programme may also provide RPs with the confidence to revisit mothballed schemes, re-engage strategic land deals, or bring forward regeneration sites that previously lacked viability… sector leaders emphasise tenant viability and cost efficiencies, suggesting that schemes are likely to need several dozen homes to stack-up.
- Collaboration will be key; the scale and ambition of the programme assumes effective local partnership between RPs, local authorities and developers. Joint ventures, integrated regeneration models and public-private partnerships (PPPs) are likely to become more prominent as delivery mechanisms. We envisage legal frameworks for procurement, but also land assembly, joint ventures and targeted local delivery will see a significant increase in importance across the sector… we are already seeing RPs working with Government on new financial models to scale-up delivery to supplement grant (e.g. pooling shared ownership equity resource as a joint entity).
- Green Book reforms suggest a longer-term change in how government values regeneration and housing investment when assessing costs and benefits of projects – potentially making it easier to fund and justify projects in lower-value areas or regions. The proposed community regeneration pilots (25 locations with £20 million each) indicate greater emphasis on place-based, collaborative development.
- Asset optimisation; RPs can manage estates and regeneration assets over longer cycles, making the business case for complex or mixed-tenure schemes more viable – and more attractive to partners as well as the community with a place-making focus. Matthew Pennycook MP’s letter also highlights how other aspects of reform such as future regulation on quality, safety and right to buy impact on the sector and are needed to facilitate long-term growth plans- watch this space…
- The changes to building safety fund access and re-commitment to the Warm Homes Plan will also see an ability for RPs to provide safer and truly affordable and efficient existing homes, hopefully without compromising on delivery of new homes or needing to dispose of stock to finance such works.
- Delivery risk remains real. While the scale of funding is welcome, delivery will still be shaped by planning system delays, policy / political uncertainty, land availability and workforce shortages. Broader sector pressures including retrofit obligations, building safety investment and fire safety compliance mean development programmes will compete for internal resource and capital… though with the voice of the sector in a position to be heard by Government, initiatives such as increased infrastructure and construction/planning skills investment are key to unlocking bottlenecks in these areas of delivery.
- Supported living as a specialist tenure was not mentioned in the review although there is an ongoing consultation on this and so, again- watch this space…
- Quality and regulatory environment certainty will be key to the transformational and lasting change the Government intend to make as consultation is proposed to begin soon on the Decent Homes Standard, Minimum Energy Efficiency Standard, and Awaab’s Law- watch this space
