£39bn for Affordable Housing

The Government’s latest housing announcement represents one of the most significant interventions in affordable housing delivery for a generation.

The Government has confirmed the first major allocations from its £39 billion Social and Affordable Homes Programme (SAHP), a ten-year programme running to 2036. Nearly £10 billion is being allocated through the first wave of Strategic Partnerships, with 33 partners outside London receiving £9.58 billion to support the delivery of around 73,600 new social and affordable homes. Nearly two-thirds of these homes are expected to be for Social Rent.

London will also receive a substantial share, with up to £11.7 billion available over the programme as a whole. This is significant not simply because of the quantum of funding, but because of the direction of travel.

Councils are back at the centre of delivery

Perhaps the most interesting aspect of the announcement is the renewed emphasis on council housebuilding. The Government wants councils to play a much greater role in direct housing delivery, alongside housing associations and the private sector.

For local authorities with land but limited development capacity, this creates an opportunity to revisit sites which have previously been considered unviable or undeliverable.

We should also encourage a much broader conversation about how public land, grant funding and private-sector development expertise can be brought together.

Grant funding could unlock stalled sites

This is where the programme could have implications well beyond the traditional affordable housing sector. Across the country there are consented and allocated residential sites which are struggling to progress because the economics simply no longer work.

Construction inflation, higher finance costs, infrastructure requirements and weaker sales assumptions have all placed considerable pressure on viability. Grants can change that equation.

Opportunities are created for developers, councils and registered providers to reconsider schemes around different tenure mixes and delivery models. Rather than asking simply, “Does this scheme work as originally conceived?”, the more useful question may increasingly be:

“Could this site work with a different combination of grant, affordable housing, institutional capital and public-private partnership?”

For stalled developments in particular, that could be an important shift.

Build costs and regulation remain major barriers

While the scale of the Government’s funding commitment is significant, funding alone will not solve the housing delivery challenge. Build costs and increasing regulatory requirements will ultimately remain major barriers to delivery.

Construction costs have risen substantially in recent years, while developers are simultaneously having to absorb increasingly demanding requirements around building safety, energy performance, biodiversity, affordable housing, infrastructure and other planning obligations. For higher-density schemes in particular, the cumulative impact can be significant.

Building Safety Regulator requirements, Gateway processes and associated programme uncertainty can add both cost and time before development can progress.

There is a danger that a proportion of this additional public funding is effectively absorbed by increased construction and regulatory costs rather than translating directly into additional homes. This makes viability increasingly important.

Grant funding needs to be accompanied by a wider examination of what it actually costs to deliver housing and whether the cumulative regulatory burden being placed on development is consistent with the Government’s ambitions for housing growth.

Funding needs to be matched by reform

If the Government genuinely wants to accelerate delivery, the focus cannot simply be on providing more funding. It must also address the cost, complexity and time involved in getting homes designed, approved and built.

That means looking at the planning system, the operation of the Building Safety Regulator, infrastructure requirements and the cumulative impact of regulation and planning obligations on development viability.

This does not mean abandoning appropriate standards. It means ensuring that regulation is proportionate, predictable and capable of being navigated within commercially realistic timescales.

The development industry needs certainty almost as much as it needs funding.

From funding announced to deliverable projects

The £39 billion commitment is undoubtedly significant. But ultimately its success will not be measured by the amount of money announced — it will be measured by the number of viable projects that reach site and the homes that are ultimately occupied.

For the development industry, the immediate task should therefore be to identify sites where this new funding environment could make the difference. That includes stalled residential developments, underutilised public land, regeneration projects and schemes where the existing tenure or funding structure no longer produces an acceptable outcome.

The opportunity is not simply to build more affordable homes. It is to use public investment intelligently to unlock sites which might otherwise remain dormant. But funding is only one part of the equation.

If Government can combine substantial investment with meaningful action on build costs, regulation, planning and delivery timescales — while councils, housing associations, developers and investors work together on more flexible delivery models — the programme could provide a genuine catalyst for housing delivery.

Without that wider reform, however, there is a risk that billions of pounds of additional funding are committed while too many schemes remain financially unviable or simply unable to progress.

The money is important. Making it possible to actually build the homes is even more important