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.
Chancellor Rachel Reeves will present her 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 for clarity until after the Spring Spending Review has set limits on the next three years' of departmental spending.
To meet ambitious build targets that were set by the previous Conservative Government, there are calls for a cash injection ahead of the new programme being announced in order to give the existing programme a much needed boost. It is estimated that the current 2021-2026 AHP will now only deliver 26,000 homes annually with initial targets being driven down because of rising costs of building materials and borrowing rates. In particular, the building safety regulations changes have resulted in a number of existing contracts no longer being viable.
Looking ahead
Sector experts are calling for a more robust and ambitious programme from the new Government. There have even been calls for funding for a 10-year programme from April 2026 with a focus on social rented homes, and for greater flexibility around grant rates as well as regeneration projects. Without such measures, delivery rates are likely to reduce even further.
One a positive note, the recent announcement by the Chancellor to introduce 10-year rent settlements in the Budget will enable social landlords to raise their rents annually by the Consumer Price Index plus a further 1% annually over the next 10 years. With the current rent settlement due to expire in 2026, this will provide much needed certainty over long-term rents.
Although the new Labour Government has made some bold claims on delivery from the outset, local authorities and affordable housing providers will only be able to do this with greater support from the Government and increased certainty on rents and investments, all whilst keeping the end user at the forefront of such plans.
This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.