Delay to new Affordable Housing Programme creates uncertainty for RPs

Stall of next five-year Affordable Housing Programme sparks further uncertainty for the sector

As the existing 2021 to 2026 affordable housing programme (AHP) is due to come to a close, the sector faces uncertainty over delays to the announcement of a new next five-year plan which is now not expected until Spring 2025.

With a new Labour Government comes the presentation of Chancellor Rachel Reeves' first Budget on 30 October 2024, however, registered providers and landlords in the affordable housing sector will have to wait another five to six months until after the Spring Spending Review has set its limits on the next three years of department spend.

In line with ambitious build targets which were set by the previous Conservative Government there is a call for a cash injection ahead of the new programme being announced in order to give the existing programme a much-needed boost to attempt to meet some of the housing need. The current 2021-2026 AHP is said to now only deliver 26,000 homes annually following initial targets being driven down by what the government cite as being the result of rising costs of materials and borrowing rates. In particular, the building safety regulations changes have resulted in a number of existing contracts no longer being viable.

Both the wider Homes England AHP and the London AHP, which is run by the Greater London Authority (GLA), are feeling the pressures and it is thought that outside of London the current funding for the 2021-2026 AHP has already been committed, but the housing secretary has made a plea to Homes England and the GLA to push numbers of social rent dwellings when looking to allocate remaining funds. Calls for flexibility on changes in tenure mix might help to enable delivery on schemes which would otherwise not work under the existing AHP.

Looking ahead to the next five-year programme and beyond

Sector experts are calling for a more robust and ambitious programme from the new government and a boost to the build targets which will still inevitably remain ambitious to meet housing need and contribute towards the 1.5 million homes across five years target.

There have even been calls for a 10-year programme from April 2026 with sufficient funding being put in place and with a focus on social rented homes and for there to be greater flexibilities around grant rates as well as regeneration projects. There is a fear that without such measures we will hit a further downturn in delivery rates.

One recent announcement by the Chancellor is the plan to introduce 10-year rent settlements in the October 2024 budget which would enable social landlords to raise their rents annually by the Consumer Price Index currently set at 2.2% plus a further 1% annually for the next 10 years. This would provide much-needed certainty over long term rents whereas the current rent settlement is due to expire in 2026.

Whilst the Labour Government has made some bold claims on delivery from the outset of being in post and whilst it is yet to be seen as to whether it will deliver, it has acknowledged the necessity to boost future investment and to work closely with local authorities to consider funding utilisation in specific areas. Local authorities and affordable housing providers need greater support in order to facilitate build programmes and enable them to escalate housing supply. They can only do this with greater support from the government, increased certainty on rent stabilities and investments all whilst keeping the end user at the forefront of such plans.