The Chancellor of the Exchequer, Rachel Reeves has announced a series of investments and measures as part of the Government’s Spending Review, including what the National Housing Federation (NHF) has described as “a transformational package for social housing”. 

Specifically, the Chancellor has announced an additional £39 billion of investment into a new Affordable Homes Programme, with the aim of expediting the building of new affordable homes to meet the Government’s target of 1.5 million new homes by 2029.  

A further £10 billion of investment (via Homes England) was also announced. Whilst the detail remains to be seen in terms of criterion and application here, the Chancellor indicated that it would be geared towards incentivising private “financial investments” in order to “unlock more homes” being built, which perhaps links to Angela Reyner’s pleas to house builders to “build, build, build” at the UK Real Estate and Infrastructure Forum on 20 May 2025.  

 In this insight we cover a summary of: 

• Context: What this means given the current backdrop of the social housing sector; 
• Development: How extra spending could unlock more social housing and how this links to the Planning and Infrastructure Bill  
• Work to do: What else does the sector need to see?

Context: What are the current issues in social housing supply? 

Research from Savills in 2024 revealed a stark drop off of RP’s investing in s.106 build schemes, estimating that 53% of RP’s were not intending to acquire s.106 schemes or had reduced their required volume. Similarly, research from the Home Builders Federation (HBF) demonstrates a worrying decline of new homes securing planning approval in the first quarter of 2025, down 37% compared to this time last year.  

And when we look at the NHF’s pleas to the Government ahead of the Spending Review in February 2025, we can perhaps see why. Citing “15 years of both capital and revenue funding reductions” and a 63% cut in grants since 2010, there is clearly concern from the NHF that the sector has been underfunded and therefore lacks the capacity to be able to properly invest in new homes. 

The £39 billion investment announced, therefore, could provide the injection of cash RPs need to ramp up supply, particularly via s.106 schemes.  

Development: How the social housing sector can boost the supply of new homes with legislative support  

The NHF’s model estimates that an investment of £7.8 billion each year in RP’s could deliver circa 500,000 homes over five years. Given the Chancellor’s announcement today of £39 billion over 10 years (equating to £3.9 billion per year), it could be said that we are still short of investment into the sector if the Government’s aim of building 1.5m homes in five years is to be met. 

Having said that, it is clear from the current context of the sector that the investment offered by the Government will help to accelerate housebuilding. From section 106 schemes being rejuvenated, to increased bids for grant funding, and to joint venture programmes between RP’s and the private sector, the additional cash offered by the Government here will assist the sector to ramp up the supply of new homes.  

An additional £10 billion for Homes England funding is also welcome news to the sector, and whilst the detail on how exactly it will be used remains to be seen, it is clearly intended to encourage private investment in affordable homes. Will we see more joint ventures, or for profit housing schemes, being ramped up via private investment as a result of this announcement?  

Legislative context is key too- the Planning and Infrastructure Bill is currently making its way through Parliament. Its key aims are to reform and make more efficient the planning system, key to which is the proposed delegation of planning decisions to help reduce unwarranted delays for applicants. We cover the Bill in more detail here. It is hoped that by unclogging (or at least, alleviating) some of the backlog, which the Local Authorities are currently experiencing in dealing with applications, re-calibrating the balance of development versus other considerations (such as environmental), and simplifying certain development projects’ consent, some of the hurdles to getting a spade in the ground will be overcome- leading to quicker development.  

What is clear from the Chancellor’s announcements is that additional funding to the sector is well-received and will help RP’s to unlock new schemes for building homes.  

Work to do: what else is needed beyond yesterday’s announcements? 

Yesterday’s announcements may be perceived as a welcome investment in social housing. However, there are signs elsewhere that more work is needed to truly unlock the sector’s pipeline stagnation.  

Investment in existing stock has been cited as a key area of potential growth by the NHF- indicating that investment is needed to regenerate “uninhabitable social homes”. The £39 billion announcement yesterday focuses on new homes rather than existing stock, which could be utilised better via increased funding to support the pipeline of new homes.  

And there is concern that the ‘front end’ (being the purchasers/renters of social housing stock) needs more support too. The previous “Help to Buy” scheme, which provided a Government-backed loan towards the deposit of qualifying social homes ended on 31 March 2023, and as pointed out by the HBF, has not been replaced by a new scheme. Statistics set out by HBF show that Help to Buy’s closure led to (approximately) an additional 25% of the population being ‘priced out’ of buying an affordable home. The question therefore is, does the Government have a plan to rebalance this effect?  

Perhaps, however, this is where the £39 billion Affordable Housing Programme (and £10 billion Homes England) investment can be used to support the Shared Ownership model of property ownership via section 106 applications. Shared Ownership makes properties more affordable for purchasers by splitting the value of the property into ‘shares’ which are owned by the leaseholder and landlord (RP) accordingly- the goal being to make home ownership more accessible to lower income households. Indeed, the previous Government’s Affordable Homes Programme in 2021 made several key changes to the model itself, including a 10 year repair warranty, gradual staircasing, and decreased minimum share requirements. The funding announced by the Chancellor today could help to bolster further rollouts and improvements to the model itself.   

Many will already be aware of recent changes in building safety legislation, which have imposed a new ‘gateways’ regime of consents for higher risk buildings (high rises). The Building Safety Regulator is the building control authority for such schemes, and is experiencing significant delays in approving gateway 2 applications currently (required to start building), taking on average 22 weeks or more as opposed to the statutory period of 12 weeks. More work will be needed to clear the current backlog to get shovels into the ground earlier, to prevent delays to project programmes, which inevitably cost developers and RP’s alike money.  

How can Capsticks help

We work with over 200 RPs across the country- including some of the largest RPs in the country- to support their new homes development programmes. At Capsticks we offer full sector expertise across social housing: from development acquisitions, s.106 agreements, construction advice and new homes sales to asset management, stock rationalisation and securitisation, governance and grant funding matters.  

If you would like to discuss how the Chancellor’s announcements could impact your organisation, and how we can support you on upcoming schemes, please contact Spencer Vella Sultana.