Spending Reviews: Highlights for Residential

Affordability in the UK housing sector has worsened in recent years, with both renters and would-be homeowners facing mounting financial pressures. Lower-income households have felt the greatest strain, as rents and property prices have outpaced wage growth and stretched household budgets. In this context, the latest government Spending Review represents a decisive intervention, placing Affordable Housing at the heart of public policy and signalling a strategic shift in how the state and private sector collaborate to deliver homes.

A major highlight of the Spending Review is the announcement of a £39 billion investment through a new 10-year Affordable Homes Programme. This initiative aims to expand the supply of affordable housing at a scale not seen in decades, supporting the construction of up to 1.5 million homes over the next ten years. The programme is designed not only to increase the number of homes but also to reform the market, making it more stable and resilient. Funding will be channelled through a mix of grants, loans, and guarantees, with a focus on unlocking complex sites and supporting smaller developers.

Central to this effort is the creation of the National Housing Bank, a subsidiary of Homes England, which will be backed by £16 billion of public investment and £6 billion of existing finance. The Bank is expected to unlock over £53 billion of additional private sector investment, acting as a consistent partner to developers and offering long-term, flexible capital. This approach recognises that public funding alone cannot solve the housing crisis; instead, the government is leveraging its resources to attract institutional capital and de-risk development, particularly for projects that are too complex or risky for traditional lenders.

Another significant policy shift is the introduction of a 10-year rent settlement for social housing. This measure is intended to provide certainty and stability for both landlords and investors, enabling long-term business planning and supporting the financial viability of new developments. For local authorities and housing associations, a predictable rental income stream is essential for securing finance and maintaining homes to a decent standard. The rent settlement also aims to restore lost revenue from previous rent caps, helping to stabilise council finances and encourage greater private sector involvement.

Additionally, the Spending Review allocates £10 billion to support financial investments by Homes England, further strengthening its ability to catalyse private capital and deliver transformative projects. This funding will help unlock land and infrastructure in high-demand areas, where site assembly and remediation costs often act as barriers to new development.

Importantly, the Spending Review also recognises the broader economic context in which the housing market operates. Employment rates and earning potential are key drivers of housing demand and prices. To support economic growth and, by extension, housing affordability, the government has increased funding for Research & Development, particularly in Life Sciences. By fostering innovation and creating skilled jobs, R&D investment is expected to boost incomes and make housing more accessible for a wider range of people.

In summary, the Spending Review signals a comprehensive and ambitious approach to tackling the UK’s affordability crisis. By combining unprecedented investment in affordable housing, innovative financial instruments, a long-term rent settlement, and support for economic growth, the government aims to create a more resilient and inclusive housing market. These measures, if effectively implemented, offer a pathway toward a fairer housing system and renewed hope for those struggling to find a home they can afford.