Introduction

The 2025 Budget introduces a new range of policy measures.  Although it does not include new housing specific initiatives, it comes on the back of a number of housing measures that were introduced in the Spending Review in June. RPs must therefore interpret the housing landscape through a combination of recent policy announcements, planning reform and forecasts. This insight explores the key announcements and considers what they mean for RPs navigating development, stock management and tenant needs.

The new position for housing providers

Affordable Housing and National Housing Bank: ongoing support

While Chancellor Rachel Reeves did not confirm new specific capital commitments, the government continues to emphasise the importance of delivering social and affordable housing. The Spring statement confirmed £2 billion funding for up to 18,000 new homes. Looking further ahead, the Spending Review outlined a longer-term commitment of £39 billion over the next 10 years, aimed at delivering government’s target of 1.5 million new homes.

The new Social and Affordable Homes Programme (SAHP 2026–2036) also provides a ten-year framework, with 60% of homes targeted for social rent, giving RPs (outside of London) confidence to plan and scale development programmes.

Complementing this is the National Housing Bank (NHB) offering low interest loans, enabling RPs to leverage private finance efficiently. We now know that the NHB will operate from April 2026 with £16bn of loans, equity and guarantees to be available, although full details are yet to be announced.  The sector has been pressing, in particular, for further information about likely interest rates but Nigel Barclay (Director of Loans at Homes England) has simply indicated these will be “very low”. We are expecting an investment prospectus to be published in the coming months.

The Office for Budget Responsibility (OBR) forecasts that housing completions will hit a low point in 2026-2027 before rising to 305,000 homes per year by 2029-2030, resulting in approximately 1.49 million homes. Given that this period extends beyond the next election, it does indicate that government’s target of 1.5 million new homes across this term of office would be likely to be missed. Nevertheless, these funding mechanisms and reforms give RPs the tools to help bridge the gap to the 1.5 million target. This reinforces that genuinely affordable housing remains a key government priority.

Rent policy – Rent Settlement and Convergence

The government has previously confirmed it will move to a 10-year rent settlement incorporating CPI + 1% annual increases. Government has also previously committed to implementing social rent convergence to further support RPs. However, the outcome of the social rent convergence consultation has been delayed until January 2026 and there is no concrete uplift figure or timescale.  There is also still no confirmation as to whether rent convergence will permit use of the rent flexibility.

VAT

The Government is launching a consultation “shortly” on proposed VAT reform that aims to incentivise the development of social housing.  Details are awaited, but this could be welcome news. 

Warm Homes and Social Housing Decarbonisation

The government continues to support green housing, confirming funding of £1.5 billion into the Warm Homes Plan, which aims to decarbonise homes while also improving occupants' health and welfare. This is in addition to the £13.2 billion already allocated at the Spending Review.

The funding will help social housing providers insulate their dwellings, enhance energy efficiency, and upgrade heating systems. This assures compliance with changing environmental standards while strengthening the value of the housing portfolio over the long term.

Planning reform

The government intends to deliver major planning reforms through the upcoming Planning and Infrastructure Bill. Key measures include simplifying approvals, lowering court review delays, and establishing a 'yes' default for development near train stations, as well as hiring 350 more planners. This reform has the potential to decrease development timeframes and give greater assurance for delivering new homes.

Pension contributions

The Budget confirms a policy change capping the employer’s national Insurance contributions (NICs) relief for salary sacrifice pension arrangements from April 2029. Any contributions above £2,000 will no longer be NIC exempt, increasing both employer and employee NIC liabilities on higher sacrificed amounts. RPs with generous salary sacrifice arrangements may face higher NIC bills.

In practice, some employers may adjust how contributions are structured. RPs should consult their employment or HR teams to assess any impact on pensions.

Wages

The Budget also confirms planned increases to the National Living Wage for over 21-s to £12.71 per hour in April 2026. At the same time the minimum wage for workers aged 18-20 will increase to £10.85 with a view to a longer term plan to there eventually being a single minimum wage for all adults. There are also increases in the rate for 16-17 year olds and in the apprentice rate.

This will have a direct impact on RPs with extensive operational and support staff resulting in higher payroll costs which will need to be factored into operating budgets. 

Delivering new homes and new towns

• Local authorities will have a key role, and partnerships will offer more opportunities, as a total of £1.3billion will be devolved through the National Housing Delivery Fund to support established and non-established Mayoral Strategic Authorities across Greater Manchester, Greater London, Liverpool City Region, the North East, South Yorkshire, and West Midland through integrated settlement. Government believes this will support local authority leaders to deliver ambitious growth projects in their areas and develop strategic sites across the country. It will be important for private RPs to have a seat at the table and to help deliver these projects.
• Tempsford, Leeds South Bank and Crews Hill and Chase Park have been identified as the most promising sites for development of new towns. Decisions on the location of new towns will be informed by Strategic Environmental Assessments with the new locations due to be announced in the spring.

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

While the 2025 Budget and related announcements provide a stable foundation, some issues still need attention to help RPs deliver homes, manage stock and support tenants effectively:

• Rent convergence guidance: clear timing and implementation details to enable RP to model income and plan effectively.
• SAHP and NHB guidance: more information on grant allocation, eligibility and loan conditions.
• Support for supported housing;
• Bridging the housing supply gap: even with 1.5 million homes targeted, further investment or policy support may be needed to address regional housing pressures and to ensure consistent delivery across the country.

Conclusion

The Autumn Budget does not introduce new housing initiatives, but together with SAHP, NHB loans and previous funding announcements, it provides a solid foundation for implementation. RPs may face issues such as delayed rent convergence, increased staff and pension costs. However, with strategic planning and government participation, some RPs are well-positioned to provide considerable affordable housing expansion while capitalising on the opportunities embedded in the government's policy framework.

The call to arms for the sector was clear – those who have capacity in their business plans to support development, should be seeking to do so – through partnerships where necessary.  But the priority remains ensuring existing residents are safe in their homes. 

How Capsticks can help

Capsticks’ housing team provides a full service to over 200 registered providers, with expertise in all social housing needs, from development and regeneration, planning and security charging, to housing management and asset management.

Please speak to Susie Rogers to find out more about how Capsticks can help.