£39bn Affordable Homes Programme could support 500,000 new homes, says JLL

The £39bn Affordable Homes Programme announced by the chancellor last week could help deliver 500,000 homes over a decade assuming an overall average grant rate per unit of £80,000, according to JLL.

Rachel Reeves last week announced a 10-year AHP worth £3.9bn in grant a year on average.

JLL said the funding could provide the starting tranche for 50,000 homes a year, if overall grant is around £80,000 per home.

The overall average grant rate in England outside London in the current AHP was around £52,000 but in London for social rent it is often between £100,000 and £200,000.

However JLL said this would leave a funding gap which would need to be filled by private finance.

“While the sector has rightly celebrated the most generous government allocation in decades, roughly another £100bn of private finance would be needed to plug the viability gap in order to deliver 500,000 new affordable homes.

“That really means additional borrowing for a social housing sector already near the limit of what it can service in terms of interest payments, even if there is plenty of security available to charge.”

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The JLL figures are based on the assumption that the current delivery model continues.

Under the 2021-26 programme outside London, around 46% homes delivered were for shared ownership, 38% for affordable rent and 16% for social rent, which is lower than affordable rent in terms of percentage of market rent. In London 60% of homes have been delivered for social rent.

However, Labour has pledged in its manifesto to prioritise social rent homes, which have a higher grant rate per unit than other types of social housing. If the proportion of social rented homes is increased compared to previous programmes, that would likely lower the overall numbers delivered through the programme.

JLL said that in order for the government to hit its 1.5m homes target it would also need to successful tackle planning blockages and ensure sufficient skills in the workforce.

Nick Whitten, EMEA head of living Research at JLL, said: “While the ambition is clear, the reality is complex.

“Fully closing the gap to 1.5 million new homes this parliament now depends on unlocking additional private investment, streamlining the planning system, and addressing the shrinking construction workforce. If the stars align, this could kickstart the biggest top-up of UK affordable housing stock in decades, taking the government closer to its target than many would have predicted. The opportunity is huge - but so is the challenge.”

Housing Today and its sister title Building magazine, through its Funding the Future initiative, is examining models to attract private finance into housing and infrastructure.