Yesterday (11 June) chancellor Rachel Reeves used her spending review to confirm the grants for the affordable homes sector – a 50 per cent uplift on the existing affordable homes budget.
Reeves, who is outlining the first government multi-year spending review outside of a pandemic in a decade, will set aside the money for local authorities, private developers and housing associations to deliver a new generation of homes.
The exact number of homes that will be built with this money is unclear, as is exactly how the funds will be allocated across England, though she said 'direct government funding' would help housebuilding for social rent in Blackpool, Preston, Sheffield and Swindon.
Alex Ely, of Stirling Prize-winning practice Mae, described the initiative as ‘the most ambitious affordable housing programme we’ve seen in decades’.
‘Affordable housing starts in England fell by 39 per cent in 2023-24,’ he said. ‘In London a drop of 88 per cent, so there is a massive hill to climb. But this investment marks a transformational turning point.'
Ely said the cash would help kickstart many schemes that were currently ‘sitting mothballed and ready to go’. He added: 'We must see this as an opportunity to deliver quality not just quantity. We are seeing a push back against housing standards, and admittedly, complexity has become the bane of delivery, but let’s spend wisely and for the long-term.’
Since Labour came to power last July, the chancellor has handed out £2.8 billion in top-ups amid calls for bigger cash injections into the affordable and social housing sectors.
In March, Reeves announced a £2 billion cash injection into the affordable and social housing sector in her Spring Statement, following £500 million in October and £350 million in February.
The government said its £2 billion in funding would deliver 18,000 affordable and social homes before 2029. Housing secretary Angela Rayner has said the government hopes to deliver as many of the promised 1.5 million new homes as possible by 229. Construction of those homes is to get underway before 2027.
New government spending, which could total an extra £113 billion, is expected to be paid for via borrowing or tax rises in the autumn, according to the Financial Times.
The National Housing Federation told the FT that the £39 billion affordable homes programme was ‘the most ambitious affordable homes programme in decades and alongside long-term certainty on rents, will kick-start a generational boost in the delivery of new social homes’.
Chloë Phelps, chief executive of architecture studio Grounded, described it as a ‘good news day for all those projects stuck due to viability’.
She said: ‘This will be a game changer for unlocking affordable new homes across the country. We do, however, need to work together to ensure that good design is at the heart of shaping these homes, and currently the way our services are procured is severely limiting our efficiency to accelerate the housing we need and our ability to use the money that is spent on these projects to boost local economies and invest in people.’
Colm Lacey of consultancy Soft Cities and a former colleague of Phelps at Croydon Council’s housing arm, Brick By Brick, said: ‘This appears to be genuinely good news. It represents a very significant “real money” increase in new capital funding for the sector alongside the unlocking of long overdue index-linked rent increases for social landlords, rebasing their asset value and enabling new borrowing.
‘It’s the first funding announcement in a very long time that is not primarily a repackaging of old money.’
He added: ‘In combination with the recent announcements on planning reform, it represents another big step on the journey from policy tub-thumping to actual delivery.
‘The next steps are perhaps the hardest: staffing and upskilling the sector, at all stages of the development process, to be able to deliver new homes at scale. And, hardest of all, winning the hearts and minds argument about the need for new development at a local level.’
A spokesperson for Architects' Action 4 Affordable Housing (AA4AH) Today’s announcement is a significant step up by the government to invest in housing as critical infrastructure for the country.
Now the challenge is to invest that money wisely for the long term through good design to ensure it is delivered efficiently, at scale and creating humane, generous places for people to live, which will endure for future generations.
Good Homes for All offers a road map to how this can be done successfully
Jay Morton, director at Bell Phillips Architects This is a step forward that shows ambition and can bring some stability. As we know, for local authorities, housing associations and private developers, one of the biggest stumbling blocks to getting the homes we need – both affordable and social – is money.
This should go some way to reversing the trend of affordable housing starts, which in London are down by 91 per cent. We know local authorities have stopped building themselves and are relying instead on joint ventures with the private sector. I fear this will mean that the low-hanging fruit, such as the small infill sites, will not come forward.
We and many architects have projects on shelves, fully designed but not even submitted for planning due to viability concerns and the complexities of the Building Safety Act. With this money, will local authorities start commissioning buildings again? I very much hope so.
Sally Lewis at Stitch Architects, now part of Broadway Malyan The housing industry has been holding its breath for too long, so this is welcome news and proof that Labour's promises are not empty, but is it enough?
‘The housing industry has been holding its breath for too long’
It's great that at last the government recognises housing as infrastructure, but will this investment unlock the private sector's wavering confidence? Let's hope this is the beginning of ‘all systems go’ because there's a lot of catching up to do.
Claire Bennie, director of Municipal Nearly doubling the grant funding for affordable homes shows a major commitment from Labour to new housing, which is very welcome. So what will be the legacy of this 10-year burst of activity? Wouldn’t it be great if, in 2065, the media were able to report that half a million attractive, low-carbon affordable homes were built in places residents were queuing up to live in?
Or might they reflect that politicians were so obsessed with numbers and pace that the homes were unremarkable and unloved? We really need to channel as much of that capital as possible to the organisations and people who care most about the future.
Hazel Rounding, managing director, shedkm More money for affordable housing is an overdue and welcome boost to the sector. We hope this announcement represents a shift in the national attitude to how best provide the new homes the country needs.
However, in the rush to build more, it’s vital that quality does not suffer and also that a variety of approaches are supported. If we’ve learned anything from our work in the residential sector, it’s that good homes can be created in many different ways; it’s not just about new build houses on greenfield land.
We need to support well-considered but quick solutions, particularly to address the climate and emergency housing crisis.
Halsbrook, Greenwich by shedkm
Patrick Devlin, partner, Pollard Thomas Edwards This is excellent news. It unlocks new build while much-needed refurbishment and retrofit continue. Planning departments will need funding to process this volume of development while maintaining or improving quality.
One of our contributions to this quality agenda is focusing on residents’ lived experience through our post-occupancy evaluations and Happy Homes projects to bring robust data into the design process.
This announcement should be the springboard to a national conversation about the quality as well as quantity of the homes we are building and improving.
David Ayre, Ayre Chamberlain Gaunt Hoping the government makes the right decision later today and provides much-needed financial support for our housing associations. We have to change the narrative and see truly affordable housing as critical infrastructure. This is a once-in-a-generation opportunity to crack the housing crisis and restore a sustainable housing ladder. Everyone in the construction industry is ready, willing and able.
This isn't, however, a silver bullet, and we mustn't forget the other issues that have been holding back the delivery of housing. Alongside additional funding, there needs to be a focus on aspects such as skills and labour, materials costs and the overall solvency of the supply chain. Without a holistic view, the promised 1.5 million homes could just remain an ambition.
Holly Lewis, co-founding partner, We Made That Clearly, all the hype is going to be about record investment in homes. This is great and much needed. Let’s make sure we’re thinking about the whole of those neighbourhoods and the lifestyles that they’ll support. The newly announced Growth Mission Fund recognises that the infrastructure that makes places great to live in – things like parks, libraries and youth clubs – are really important to our quality of life. Let’s embrace that fund, and embed that thinking into the new places we’re planning for, too.
Miranda MacLaren, director and housing lead, Orms The £39 billion allocation over 10 years represents a transformational investment compared with the previous £11.8 billion five-year programme. This is precisely the scale of commitment needed to address our housing crisis.
What particularly encourages me is how this funding could help tackle our temporary accommodation crisis. In 2023, we spent £1.74 billion on temporary accommodation – a staggering amount that represents both human suffering and poor value for money. This new funding must prioritise creating genuine pathways into affordable social rent homes.
Hugh Petter, design director, ADAM Architecture It was well trailed in advance, but the chancellor’s announcement in her spending review of £39 billion for new social and affordable housing is really excellent news. Across the country, the lack of funding for affordable housing has been a massive problem on the majority of development sites.
Care must be taken now to ensure that this money is used to create places where people want to live; ideally close to where they work, and with pedestrian and cycling connectivity to key facilities such as schools, medical centres, shops and open space for recreation.
When delivered properly, these places are socially integrated and allow everyone to lead healthy happy lives. This requires careful planning and construction. In making this cash available ,the government has created a tremendous opportunity to get this right on all levels. Let’s not waste it; let’s not leave a toxic legacy.
10/02/2025. Nansledan, United Kingdom. Prime Minister Keir Starmer and King Charles III visits the Nansledan housing and community project. Picture by Simon Dawson / No 10 Downing Street
Muyiwa Oki, president, RIBA With more than a million households on social housing waiting lists, today’s long-term investment to deliver new homes is very welcome. This £39 billion 10-year settlement is a step towards delivering the homes we desperately need. However, ensuring that a significant proportion of new homes are for social rent is crucial.
But money alone isn’t enough. Alongside these positive measures, we need radical change to enable local authorities to build and retain social housing stock. As such, we urge the government to pilot new models for the delivery of social housing.
Good transport links, easy access to public services and green spaces are also vitally important to creating places where people want to live. Today’s settlement for transport infrastructure is therefore welcome.
Architects are uniquely placed to help turn the government’s ambitions for growth and renewal into reality. But if we are to deliver high-quality, energy-efficient buildings and places which are adaptable and resilient, we need a pipeline of talent. Ensuring the profession is diverse and competent for generations to come requires funding for architectural education and apprenticeships.
We are ready to work with the government to help deliver its plan for growth by improving the built environment across the country. Today’s announcement brings us closer to that shared goal.
Matt Thornley, co-founder, Gibson Thornley Architects The funding for social and affordable housing is a major boost for the country and is desperately needed. While TV architecture fetishises bloated luxury, homelessness has grown, which is unacceptable. Good housing is a basic human right and should be a part of our social infrastructure.
‘While architecture fetishises luxury, homelessness has grown unacceptably’
Quality and care over speed and profit is critical to create long-term, sustainable places that we can call home.
Seth Rutt, founding director, Studio Multi Seeing the government actively committing to deliver more housing in the next 10 years is an encouraging sign for our industry. The £39 billion pledge will cover the net construction cost of about 12,000 additional affordable homes per year, which is great news. If these can be built to Passivhaus standards to address fuel poverty, even better.
However, my instinct is that this annual figure will meet about 3-5 per cent of the 300,000 homes per year to reach the 1.5 million homes promise in five years – so it does show how much we will be relying on the private sector and registered providers to cross-subsidise affordable homes from private sales and rentals.
Therefore, for optimised, dense delivery, we still need an unlocking of the Planning and BSA Gateway 2 processes – and clarity on the Building Regulations versus British Standards debate – to speed up delivery and improve viability. Hopefully, some of this cost can be met with this spend. Keir Starmer’s announcement of Extract, the government’s new AI-powered tool, to automate planning validations at some LPAs was a good start. What’s up next?
Ed Parham, director of innovation and Design, Space Syntax Funding affordable housing to help address the housing crisis is a positive move, but it is only the start of the process. Investment in new homes should also underpin economic growth, improve health outcomes and minimise climate change.
To ensure that happens, we need to make sure we deliver homes in the right places. We need not only to build housing, but also to provide a mix of uses, including shops and jobs. We need to build real places and not just housing estates.
The Reach affordable housing scheme by Pitman Tozer Architects
Stephen O’Malley, chief executive, Civic Combined with the £15.6 billion settlements for England’s city regions announced last week, it shows that the government is set on delivering on a growth agenda. It is now imperative that the projects and local authorities benefiting from this funding injection can take the lead from areas like Greater Manchester, which has identified decarbonisation, network expansion and ‘door to door’ active travel as its priorities.
Jonathan Pearson, director, Residentially This new funding delivers the clearest signal yet that the government understands the scale of the challenge facing the country’s affordable housing providers. The housing associations I work with have always stressed that they stood ready to scale up their efforts in line with the government’s own ambitions, but they first needed to know how much money was available and how it would be allocated. Today’s announcement goes a long way towards answering that call.
‘This government understands the scale of the challenge’
While we’re still awaiting further clarity around how and when this funding will be allocated, they can at least begin to plan multi-phase schemes, secure land, and mobilise supply chains with confidence and at the pace required to help meet the 1.5 million-homes target.
Not-for-profit housing associations are also forced to make every penny count when it comes to the number of new homes they can afford to take on, so longer-term certainty on rent is also going to be important when it comes to developing their plans.
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