The social housing crisis is worsening, with fewer affordable homes being built at a time of rising demand. The only way to reverse this trend is to invest more public money to fix the system and create greater stability for registered providers (and fix the planning system so that it supports affordable housing development).
The £500 million top-up announced (for the 2021/26 Affordable Homes Programme) by Rachel Reeves at the Autumn Budget and the further £300 million top-up announced in February (alongside the £50 million for council house building) are welcome, but they will do little to increase certainty in the sector. Registered providers can’t afford to buy land for development or invest to get new schemes underway because rising costs and other challenges have got in the way. They have been forced to reprioritise and redirect funds to maintenance and repair programmes, in order to provide safe, quality homes for existing tenants. They need certainty about what the future holds.
Clarity is needed for the next affordable housing 2026 – 2031
Social landlords are waiting for the Government to set out a new five-year plan for grants available under the new Affordable Homes Programme (AHP), but this has not yet materialised.
Without clarification of the grants available to support affordable housing delivery through 2026/27 and beyond, registered providers will be forced to put their investment strategies on hold and building work will cease. With the current AHP in England having revised down its targets and set to miss its initial targets by some 50,000-70,000 new homes, and with demand rising exponentially, the gap in the supply of affordable homes for disadvantaged and vulnerable people is bound to worsen.
A clear rent policy and ‘convergence mechanism’ are needed
The Government needs to take urgent action to support publicly funded registered providers that have been rendered unviable by an out-of-date and unfair policy that prevents them from imposing rent increases above the value of CPI plus 1% annually for the period between 2026/27 and 2030/31. A consultation on the Government’s new proposed social housing policy closed in December, but registered providers urgently need to know what’s coming next.
In many places there is a difference in the social rents payable between existing social rent tenants and new social rent tenants and permitting social landlords over time to address that imbalance (rent convergency) alongside certainty on rent increases would the ability of registered providers in some areas to invest in land acquisition and kickstart development activity. The Government must intervene to introduce a convergence mechanism to allow registered providers to move their rents closer to the Government-controlled ‘Formula Rent’.
What next for Homes England?
It has been rumoured that the Government could be intending to abolish Homes England once the Affordable Homes Programme (AHP) has been devolved to combined authorities, but that could be a waste of valuable resources, which could be deployed to drive forward its new towns strategy.
Whilst most housing sector experts believe the Government’s pledge to build 1.5 million new homes in the current parliament is not achievable, accelerating the delivery of its new towns strategy, which aims to build the homes that communities need, could certainly make a significant dent.