Spending review announces £39bn in affordable housing

Chancellor Rachel Reeves has reiterated the Government’s commitment to the housing sector by earmarking £39bn for social and affordable housing over the next 10 years.

In the Labour Government’s first spending review, Reeves said spending in the Affordable Homes Programme will reach £4bn in 2029-30, and then rise in line with inflation. This funding is intended to help housing associations buy thousands of new homes built by private developers as part of their affordable housing commitments.

A further £2.5bn in low-interest loans will be available to help social housing providers invest in new developments. To speed up the remediation of social housing and improve tenant’s living conditions, more than £1bn will be invested between 2026-27 and 2029-30.

Finally, the Chancellor confirmed £4.8bn between 2026-27 and 2029-30 to attract additional private investment for new housebuilding, to be managed by Homes England.

The construction industry gave the review a cautious welcome, with most pleased to see that housing continues to be a key focus.

Andrew Orriss, Chief Executive of the Structural Timber Association, said: “Housing is the biggest challenge that the UK currently faces, and the Labour Government underpinned it as one of their main objectives throughout their election campaign and budgets. It was positive to see that the Government has reaffirmed this commitment with a pledge of £39 billion for affordable housing over the next 10 years.

“With the Government reconfirming their commitment to the revised Timber in Construction Policy Roadmap in February 2025, there is certainly no doubt that increasing the use of structural timber and offsite manufacturing is a key aspect of ensuring the rapid and high-quality delivery of these vitally needed homes.

The STA remains wholly committed to working collaboratively with government, industry partners, and stakeholders to drive a transformative approach.”

Meanwhile, fire safety engineering consultancy Harmony Fire noted that the scale of the £39bn investment in the Affordable Homes Programme had already seen “universal approval as transformative and great news for the sector”.

Director Lee Goodenough continued: “This major investment in social housing will change the calculus for many organisations that have previously been scaling back their newbuild programmes and redirecting funding to upgrading and modernising existing assets. Through this new commitment, housing associations and local authorities will now have the capital allocations to both continue on vital programmes to improve the safety and comfort of homes for residents, while simultaneously building new infrastructure to tackle the urgent housing crisis.”

Peter Rainier, Principal Director of Planning at law firm DMH Stallard, added: “To ensure the wider aspiration for high volumes of housing over the coming years, there is still much to be done, particularly in ensuring local planning authorities are properly resourced, SME'S are assisted and through the Planning Bill, that strategic/local plans are progressed efficiently and development is not unduly hampered by concerns relating to surface water and environmental protections.”