Following the budget announcement by the Government on 30 October 2024, the housing sector and in particular affordable housing providers have been digesting the various measures announced by the Chancellor of the Exchequer. Here we set out some key highlights for affordable housing in particular;
- Investment – the Chancellor announced a total investment in housing supply of more than £5bn next year towards their target of building 1.5 million new homes over the next five years. In particular, there will be an increase of investment in the Affordable Homes Programme next year to £3.1bn which equates to an additional £500m to the current Affordable Homes Programme to build up to 5,000 additional affordable homes. The current Affordable Homes Programme expires in 2026 and further detail regarding the future grant investment for the new Affordable Homes Programme will follow in Phase 2 of the spending review
- Right to buy – right to buy discounts will be reduced (although the detail around this has not yet been published) and Councils will be able to retain full receipt of the sales of right to buy homes to invest in new properties
- Rent – there will be a social housing rent settlement of CPI+1% for the next five years, although some commentators hoped this would be longer. However, this will provide some comfort for affordable housing providers by allowing more long term investment in social housing and the Government notes that consultation will be carried out on whether to increase this to a 10-year settlement.
- Building safety – investment in remediation to unsafe housing will rise to £1 billion in 2025-26 which includes investment in the remediation of social housing
- Lending – The government is extending the discounted Public Works Loan Board Housing Revenue Account lending rate until March 2026
Hopefully, the proposed changes will filter through the housing sector and allow more affordable units under Section 106 agreements to be sold to affordable housing providers who will have sufficient funding in place and more confidence to invest in social housing.
With the Governments focus on providing more housing, and particularly social housing, it will be interesting to see what is set out in the next Affordable Homes Programme to continue to encourage and facilitate development of affordable housing in this country.
Should you wish to discuss any of the issues raised in this article, please contact Connie O’Donnell.
