Sector enthusiastically welcomes package, which also includes a 10-year rent settlement and a consultation on convergence
Social housing leaders have been reacting to the news this morning that Rachel Reeves will announce a significant increase to Affordable Homes Programme funding (AHP) in the spending review later today.
In a short release last night, the Treasury said the chancellor will announce a £39bn, 10-year AHP, significantly more than many expected and higher than the £25bn programme reportedly being considered by Reeves earlier in the week. The average £3.9bn a year grant rate is higher than approximately £2.5bn seen under the current 2021-26 AHP, including top-ups.
The Treasury also announced a 10-year rent settlement, double the five-year period the government previously favoured, with rents permitted to increase by CPI plus 1%. It will also consult on re-introducing rent convergence.
Full details of the funding and other housing announcements will be made later today.
The surprise announcement has been enthusiastically welcomed by the social housing sector.
Kate Henderson, chief executive of the National Housing Federation, described the funding and rent settlement as a “transformational package for social housing” that will “deliver the right conditions for a decade of renewal and growth.”
She said: “This is the most ambitious Affordable Homes Programme in decades and alongside long-term certainty on rents, will kickstart a generational boost in the delivery of new social homes.”
Rachael Williamson, director of policy, communications and external affairs at Chartered Institute of Housing said the announcement “shows the power” of the sector’s “collective voice.”
She said: “It may not be all that we asked for in our spending review submission but it’s nearly double the annual funding of the previous programme. And if focused on social rent, it could have a transformational impact – helping thousands of families without a safe and secure home.”
Clare Miller chief executive of Clarion, said the funding and the fact it is over a 10 year period is a ‘game changer’ for families on the lowest incomes.
“Long-term, reliable subsidy is the only way to keep new rents genuinely affordable while covering the rising costs of land, labour and materials.
“For the first time in living memory, housing associations have ten years of certainty. That gives us the confidence to borrow, build and invest at scale—unlocking sites that simply don’t stack up without grant and protecting every pound of residents’ rent for services and maintenance.”
This was echoed by Nick Harris, chief executive of Stonewater, said: “It is hugely reassuring to see long-term funding for affordable homes of £39bn.
“This programme has been instrumental in helping Stonewater deliver thousands of much-needed homes across the country, including some developments with over 100 affordable homes. Support for this work must continue to give housing providers like us the confidence to plan long-term, invest in ambitious developments and deliver the homes communities urgently need.”
He said the new inflation-linked rent settlement gives “greater financial stability and certainty”.
Fiona Fletcher-Smith, chief executive of L&Q, said: “The £39 billion Affordable Homes Programme, coupled with a 10-year rent settlement, gives housing associations like ours the certainty to plan, build and invest.
“We’re encouraged by the consultation on rent convergence and urge the government to bring it forward quickly.”
Fletcher-Smith said she hopes to see further measures including access to the Building Safety Fund for social landlords.
Kieron Williams, leader of Southwark Council, said the AHP funding and 10-year rent settlement is the “kind of bold, radical action that our country so badly needed.”
He said: “This is a turning point for communities across our country. It will lift thousands of families out of homelessness and overcrowded homes, and will give councils the certainty and income we need to raise standards in our existing council homes too.
“We are delighted that the government has listened to our call from our coalition of 112 councils. We can now work to turn the tide on the housing crisis that has held so many lives back.”
Melanie Leech, chief executive at the British Property Federation, said: “With really tough choices to be made in the spending review we are delighted that the government has prioritised the delivery of affordable and social housing and that it is investing significant additional sums to support a sector that has faced tough headwinds in recent years.”
Leech said the 10-year rent settlement is a “significant step forward to help the sector to plan with more certainty and to help unlock the huge amount of long term private capital such as pension funds, that wants to invest in genuinely affordable homes.”
Stephen Teagle, chief executive, partnerships and regeneration at Vistry Group, said the funding will have a “transformative impact” on its ability to deliver affordable and mixed-tenure homes.
He said: ”It is great news for our partner housing associations and local authorities, great news for the economy and great news for the thousands denied access to an affordable home.”
Greg Reed, chief executive of Places for People, said the combination of the funding and the 10-year rent settlement ”will drive real momentum to meet the government’s 1.5 million homes target.”
He said however ”more can be done to further strengthen the sector’s financial capacity.”
Paul Hackett, chief executive of Southern Housing, said “the AHP increase won’t help with “Southern’s limited EBITDA-MRI cash interest cover” unless there is a significant grant rate per unit.The G15 landlord has stopped new development due to concerns about breaching its interest cover limits.
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Hackett however added: ”However if building safety funding is extended to social and affordable rented homes this would be a game changer’”.
The Treasury release on Tuesday night did not say anything about reported plans to redesignate Homes England as a a “public finance institution” - dubbed as a “housing bank” by insiders, to enable it to create financial assets through big investments or large scale lending.
The move would reportedly allow Homes England to deliver more finance to the housing industry and lowering the capital cost for housing developers.
The release also did not say whether the government will look to reclassify housing as critical infrastructure.
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