The chancellor Rachel Reeves has announced a £2bn injection of new grant funding to help to deliver up to 18,000 new social and affordable homes.

The investment was described as a down payment from the Treasury ahead of more long-term investment in social and affordable housing planned later this year that would provide additional funding for 2026-27 and beyond.

The government invited providers to come forward as soon as possible with new affordable housing projects.

Reeves said: “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 2025, 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.”

Deputy prime minister and housing secretary Angela Rayner added: “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 onto the housing ladder. This is just the latest in delivering our Plan for Change mission to build 1.5 million homes, and the biggest increase in social and affordable housing in a generation.”

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.

“Social housing is the only secure and affordable housing for families on low incomes, and the dire shortage has led to rocketing rates of poverty, overcrowding and homelessness. Investment in social housing is not only key to tackling the housing crisis, but is also excellent value for money, reducing government spending on benefits, health, and homelessness as well as boosting growth. Housing associations are ready to work with the government to deliver a generation of new social homes.

A spokesperson for RICS added: “RICS welcomes the £2bn investment announced by the deputy prime minister and chancellor of the exchequer today, which paves the way for 18,000 new social and affordable homes. 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 industry has been calling for ahead of the longer-term funding programme being announced later this year, ensuring that industry has the confidence it needs to expedite development, get spades in the ground and deliver on the government’s target for 1.5 million 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.

“As ever, RICS will continue to support the government wherever and however we can as ministers continue to make bold reforms to the planning system, progress with their mission to build 1.5 million new homes and deliver sustainable economic growth across Britain.”

Charlie Nunn, CEO of Lloyds Banking Group, said: “A safe and lasting home is the foundation for good lives and livelihoods, and we welcome this boost to building much-needed social and affordable homes. As the UK’s biggest commercial supporter of social housing, we’re working across the private, public and community sectors to help increase provision of good quality, genuinely affordable housing for those in need.

David Thomas, CEO of Barratt Redrow, added: “To increase construction activity and build the homes the UK desperately needs, we need support for demand across all tenures. As well as providing more much-needed affordable homes, this welcome investment will help unlock mixed-tenure developments and to create jobs and economic growth across the country.”

Stephen Teagle, chair of The Housing Forum, said: “This additional funding signals that the government is listening to the sector and reaffirms its strong commitment to accelerating the delivery of much-needed affordable housing while driving economic growth. It represents an unprecedented intervention which, when paired with sustained, long-term investment, will be instrumental in meeting the growing demand for affordable homes.

“Now, it’s up to the industry to rise to the challenge — accelerating delivery, building momentum towards the government’s target of 1.5 million new homes, and ensuring we provide the housing this country urgently needs.”

Olivia Harris, chief executive of Dolphin Living, added: “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 away. 

“Demand it is vital that we meet to continue to accommodate those who play a key role in keeping our economy going. However, if the government really wants to rapidly increase supply, then we also need to have a serious debate on affordable tenure and in some cases switch to intermediate affordable housing, in addition to this extra funding, to really start getting those affordable housing consents converted into building activity.”

Andy Hulme, group chief executive of The Hyde Group, said: “This additional funding is extremely significant for the sector as the government aims to get more spades in the ground. Combined with the extra £800m announced over the past six months this government has now backed the Affordable Homes Programme with almost £3bn of extra funding over the past six months.

“We welcome this top-up for the Affordable Homes Programme, which we hope is a downpayment on future funding, as it comes at a time when new housing starts in England have been falling year-on-year. Now we need the government to agree to an expanded long-term Affordable Homes Programme at the spending review, and an ambitious ten-year, inflation-linked settlement for social rents and includes the reintroduction and acceleration of rent convergence.”

Patrick Hickey, director at Make NW and former head of development at the housing association, Arcon, said: “At a time when councils across England have to meet stretching new housing targets every year for the next four years this additional funding will be very welcome. Some councils in the North West have seen their annual housing target more than double.

“With councils spending more than £2.3bn a year on the cost of temporary accommodation we know how important this funding is as we are working with councils to deliver more affordable homes and new, council-led temporary accommodation so they can improve the quality and reduce the cost of temporary housing.

“While this additional funding is desperately needed the government now needs to focus on sustainable long-term funding for the Affordable Homes Programme in the spending review so they can make good on their promise to deliver the largest boost to social and affordable housing in a generation.”

Paul Rickard, chief executive of Pocket Living, added: “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 house building 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 policy (real estate), at the BPF, 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 delivery in many cases will remain closely tied to that of the wider housing market. That’s why it is vital that 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.”

Nicholas Harris, chief executive of Stonewater, added: “We wholeheartedly support the government’s announcement of £2bn in additional funding for affordable homes. This investment is a welcome and necessary step towards addressing the housing shortage and providing secure, safe homes for people across the country.

“It also highlights the government’s ongoing commitment to tackling the housing crisis and we urge them to continue to provide the sector with the long-term certainty it needs to deliver more homes. We are eager to see the full extent of the government’s long-term commitment in the upcoming spending review.

“Looking ahead, we believe that sustained financial investment alongside effective planning reform will be essential to unlocking these homes. Streamlining the planning process and removing unnecessary barriers will enable the sector to deliver much-needed affordable housing more efficiently and at scale. We stand ready to support the government to ensure that the reforms and funding translate into tangible results for communities and individuals in need.”

James Crow, Director of Mixed Tenure at Harworth, said: “We welcome today’s announcement from the government as a positive stop-gap extension to the existing five-year funding programme, which should help lift the handbrake being applied on the development of new affordable housing as the 2021-2026 funding programme comes to an end. This should give housing associations, housebuilders and developers much needed certainty in the short term.

“While this funding extension is a helpful step, the sector needs greater clarity on what the longer term funding programme will look like. Given the considerable amount of time involved in bringing forward new schemes through planning and the enabling process for development, the sector needs a clear roadmap and one that supports genuinely new affordable schemes and ensures fair geographic distribution.”

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Source: BENEWS

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