New Affordable Homes Programme 2026-36 announced
This £39bn funding announcement is a major boost for the sector and reflects the Government’s ambitious commitment to build 1.5 million new homes in the current parliament.
Demand for affordable homes is rising across the country and the grant funding confirmed by the Chancellor for the new Affordable Homes Programme (AHP), spanning the next ten years, will kickstart significant housing development of social and affordable rent properties required across England.
If anything, the grant funding announced today is much more than many registered providers and the sector were expecting, and the long-term nature of the funding commitment and amount will bring greater certainty for financial planning. As ever, we must wait for the detail to confirm the scope of the funding and how it will be administered. For example, we don’t yet know if S106 agreements will be included in the scope of the AHP 2026-36, which could stimulate development activity further and with increased costs of building properties, it won’t be sufficient to cover all new builds but will make a substantial difference. It is expected that the funding will be administered through local authorities, but this level of detail will be announced later in the year.
Long term rent settlement
Following last year’s consultation on plans to maintain the cap on annual social rent increases at CPI +1% for the next five years, few Registered Providers (RPs) were expecting this to be improved upon. However, the Chancellor has now committed to CPI + 1% for the next ten years, which is an excellent outcome for the sector in the circumstances: it provides greater financial certainty moving forward and allows longer-term business planning, which in turn should create longer-term stability across the sector. It should go some way to helping Registered Providers to improve the viability of their business models at a time when costs have risen significantly (and will continue to do so) and regulatory pressures are requiring urgent repair and retrofit programmes for their existing stock.
A further consultation on rent convergence
The decision to consult further on how to implement social rent convergence, which was removed by the Rent Standard 2015, is more good news for the sector. It shows the Government has been listening to the concerns set out in consultation responses.
Reinstating rent convergence would be especially helpful to social landlords with long-term tenants who have been paying a rent that is in some cases well below the current ‘Formula Rent’ for some time.
The removal of rent convergence has impacted the total income of some RPs significantly, exacerbated by the 1% rent decrease applied in 2016-2020, the rent cap in 2023 and costs increasing higher than inflation. Without the ability to bring rents into line with Formula Rent, this has created challenges for some social landlords, which in turn has caused some new development activity to stall. Reinstating the rent convergence would be a win for the sector and further support the provision of much-needed affordable homes and investment in existing stock.
A second consultation gives opportunity for tenants and others to put forward their views and comments on this proposal. Whilst many landlords and the sector strongly advocated for the re-introduction of rent convergence within their general comments in consultation responses, the idea was not part of the Government’s original rent settlement proposals in 2024 and so not necessarily an issue tenants would have responded on. This further consultation gives them (and landlords again) a clear opportunity to do so now.
Kate Davies, social housing development partner at Anthony Collins, said:
“The social housing sector will also be eagerly awaiting further details of the additional £10 billion mentioned for financial investments into social and affordable housing – in part to be delivered through Homes England – to crowd in private investment and unlock hundreds of thousands more homes. It remains to be seen what this will comprise: amongst other details, the published policy mentions £2.5 billion of low-interest loans over the spending review period for social housing providers to further boost their capacity to invest in new development, which will be welcomed by the sector.”
Digby Morgan, partner in the property team at Anthony Collins, said:
“References to over £1 billion of new investment between 2026-27 and 2029-30 to accelerate the remediation of social housing, by giving social housing providers equal access to government funding as private building owners, will be especially welcomed by those in the sector struggling to fund damp and mould remediation projects. Whether “remediation” in this context also suggests a fund now available for cladding remediation accessible to RPs remains unclear.”