A significant uplift in support for housebuilding was revealed during Rachel Reeves’ Spending Review announcement today.
The Chancellor laid out a ten-year strategy worth £39 billion, aimed at boosting the development of affordable and social housing throughout the UK. This is part of a broader effort to address the long-standing housing crisis.
This major investment will be shared among local councils, housing associations, and private developers. The government’s goal is to help deliver 1.5 million new homes, ensuring more people have access to affordable and secure housing.
Compared to the previous programme, which earmarked £11.5 billion over five years from 2021 to 2026 (equivalent to £2.3 billion annually), this plan marks a considerable increase in both scale and ambition.
The government now intends to almost double its annual affordable housing spend to £4 billion by the 2029/30 financial year.
To fund this significant expansion, an additional £113 billion in capital investment will be made possible through increased borrowing, supported by earlier changes to the fiscal rules.
The Spending Review also contained several other major announcements. Among them was a commitment to phase out the use of hotels for housing migrants by the time of the next general election.
Additionally, nine million pensioners will continue to receive the Winter Fuel Allowance, offering some reassurance ahead of colder months.
Transport across Britain’s towns and cities will benefit from a £15 billion funding injection, part of wider plans to improve regional connectivity.
In terms of innovation, £22 billion has been committed to research and development, including £2 billion specifically for artificial intelligence.
Clean energy will also see a substantial boost, with £30 billion earmarked in total, including £14 billion to support nuclear energy projects like Sizewell C.
Departmental budgets will rise by 2.3% annually, with total day-to-day spending across government departments set to increase by £190 billion compared to previous plans set by the former Conservative administration.
Defence will receive enhanced funding as well, with the budget increasing to 2.6% of GDP by 2027, reflecting a renewed focus on national security and global commitments.
Speaking in Parliament, Rachel Reeves said: “I am proud to announce the biggest cash injection into social and affordable housing in 50 years… A new Affordable Homes Programme – in which I am investing £39bn over the next decade… Direct government funding that will support housebuilding, especially for social rent.”
A government spokesperson added: “We’re turning the tide against the unacceptable housing crisis in this country with the biggest boost to social and affordable housing investment in a generation. This is a clear commitment to get Britain building again.”
In the Spending Review documentation, the government also confirmed £100 million will be allocated to help prevent homelessness, offering early support to those at risk.
This follows the announcement that the 1824 Vagrancy Act, which criminalised rough sleeping and begging, will be abolished by Spring next year.
Furthermore, an extra £950 million will be added to the Local Authority Housing Fund (LAHF) between 2026 and 2030. This will enable councils in England to provide accommodation for refugees and individuals struggling to find stable housing.
What’s happening to social rents?
The government has announced a new 10-year plan for social housing rents, which is set to begin in 2026.
Under this policy, housing providers will be permitted to raise rents each year by the rate of inflation plus an additional 1% (CPI +1%). This change is expected to give landlords greater financial certainty, helping them to invest in maintaining existing homes and building new ones.
Alongside this, the government plans to launch a consultation to review how rent levels can be made fairer for social housing tenants across the country.
The overall aim of the plan is to strike a balance between securing investment for more housing and protecting tenants from steep rent rises.
Although this approach is being pitched as a long-term solution, similar promises have been made by past governments — with mixed results.
Back in 2012, the coalition government led by David Cameron introduced a 10-year rent policy that linked annual rent increases to the retail price index (RPI) plus 0.5%.
However, this commitment was later abandoned when then-Chancellor George Osborne imposed four years of below-inflation rent rises to help reduce housing benefit spending.
In more recent years, Boris Johnson’s government set out a five-year rent formula in 2020, allowing annual rises of CPI plus 1%. But that plan was also interrupted due to inflation surges, and a 7% rent cap was temporarily imposed.
A major issue is that most social housing tenants receive full or partial housing benefit from the government, meaning any increase in rents is often covered by taxpayers.
Nevertheless, about 30% of social housing tenants do not qualify for benefits and pay the full rent themselves. This group will feel the full impact of any future rent increases.
At present, around four million households are living in social housing across the UK.
This long-term rent policy is being positioned as a way to give housing providers financial stability while also making rent fairer and more predictable for tenants.
The upcoming consultation is expected to explore methods for achieving greater fairness in rent-setting, ensuring tenants aren’t burdened with unreasonable increases.
While the government has set out a decade-long vision, past examples show how difficult it can be to stick to these promises when economic conditions shift.
Only time will tell whether this plan delivers both the investment the housing sector needs and the protection tenants deserve.
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