Chancellor Rachel Reeves and deputy prime minister and secretary of state for housing Angela Rayner have announced a £2bn injection into the Prime Minister’s Plan for Change.
The investment will deliver up to 18,000 new social and affordable homes.
The investment boost comes as a down payment from the Treasury. The duo said more long-term investment in social and affordable housing is planned for later this year, which will provide additional funding for 2026-27 and well as for future years.
Rayner said: “Everyone deserves to have a safe and secure roof over their heads and a place to call their own, but the reality is that far too many people have been frozen out of homeownership or denied the chance to rent a home they can afford thanks to the housing crisis we’ve inherited.
“This investment will help us to build thousands more affordable homes to buy and rent and get working people and families into secure homes and on to the housing ladder. This is just the latest in delivering our Plan for Change mission to build 1.5m homes, and the biggest increase in social and affordable housing in a generation.”
Reeves added: “We are fixing the housing crisis in this country with the biggest boost in social and affordable housebuilding in a generation. Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people’s pockets.
“At the conclusion of the current Spending Review process on 11 June, the government will announce further long-term investment into the sector in England, delivering the biggest boost to social and affordable housing in a generation.”
The sector embraced the government announcement, with Andrew Usher, group managing director for Places for People Developments, saying it reflects the government’s understanding of “urgency to fund the building of new homes during this parliament”.
He said: “Sites have stalled, skills have dwindled and too few homes have been built. This additional £2bn funding will kick-start projects and enable strategic partners that deliver to access grants to quickly accelerate delivery.
“This package of support is hugely welcome, alongside additional investment this week into skills. But government must still find another gear to unlock housebuilding, future-proof its workforce and help heal the economy. Recent measures and reforms are important bricks in the wall and must be followed by a bold long-term strategy later this year.”
Kate Henderson, chief executive at the National Housing Federation, said: “This funding top-up is hugely welcome and demonstrates the government’s commitment to delivering genuinely affordable, social housing for families in need across the country. The additional £2bn will prevent a cliff edge in delivery of new homes, ahead of the next funding programme being announced.
“Housing associations are ready to work with the government to deliver a generation of new social homes.”
Rob Perrins, chief executive at Berkeley Group, said: “This is another very positive step forward for the government’s homebuilding agenda. The new funding and reforms will create a more effective skills system that meets industry needs and equips trainees for a successful career. At Berkeley we are committed to training the next generation of built environment professionals and the government’s support is hugely welcome.”
Olivia Harris, chief executive at Dolphin Living, said: “This additional funding is very much welcome and needed especially given the huge viability challenges many affordable housing developers are facing which is stymying the delivery of much-needed new housing. This is especially so in place like London where start-on-sites are at near-record lows while demand continues to accelerate.”
Paul Rickard, chief executive at Pocket Living, said: “Tackling the viability issues and getting housing schemes from the point of planning consent to a start on site remains one of the greatest challenges that the housebuilding industry faces. This is most acute for SME housebuilders who need a rapid turnaround of their developments to simply survive and stay in business. While this is welcome news, we await further details on the allocation between London and the rest of England, especially given the crisis in housing starts in the capital and the shortage of affordable homes. We look forward to the longer-term funding announcements and will continue to work with the government on targeted initiatives to support the SME housebuilding sector more widely before it is too late.”
Ian Fletcher, director of real estate policy at the British Property Federation, said: “While an additional £2bn in funding to deliver 18,000 extra affordable homes is very welcome, the scale of the challenge remains immense and, in many cases, delivery will remain closely tied to that of the wider housing market. That’s why it is vital the government adopts a multi-tenure approach to delivery and focuses on areas like build-to-rent, supporting forms of intermediate housing such as discount market rent, which are not dependent upon sales absorption rates. Predictable long-term decisions on funding and social housing rents can also help simulate more investment, including private sector investment, in affordable housing. Our big ask at this time is that the further funding due to be announced later this year is linked to a long-term funding programme that allows the sector to plan for growth in the long-term.”
A spokesperson for the RICS said: “This is an investment RICS recently joined industry leaders in calling on the chancellor to announce, and is a welcomed boost to housing delivery.
“This new funding will provide the smooth transition that industry has been calling for ahead of the longer-term funding programme being announced later this year, ensuring the industry has the confidence it needs to expedite development, get spades in the ground and deliver on the government’s target for 1.5m new homes. Amid a challenging economic and fiscal outlook, the delivery of new social and affordable homes will also help to reduce the financial costs on HM Treasury, across housing benefits and temporary accommodation and homelessness.”
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