Chancellor promises £500m top-up to AHP and puts five-year rent settlement out for consultation

Reducing Right to Buy discounts

 

The government added its Budget will protect existing social housing stock by reducing Right to Buy discounts so that “thousands more council homes remain in the sector”.

 

Discounts will be reduced alongside greater protections for newly built social housing and councils will be able to keep 100 per cent of the receipts generated by a Right to Buy sale.

 

The government said this will enable councils to “scale up delivery of much-needed social housing whilst still enabling long-standing tenants to buy their own homes”.

 

The government has previously said it has given councils more flexibility to use their Right to Buy receipts to build and buy more social homes.

 

In its manifesto ahead of the general election, Labour said it would better protect existing stock by reviewing the increased Right to Buy discounts introduced in 2012 and boosting protections on newly built social housing.

 

Additional AHP funding

 

The government also announced £500m in new funding for the AHP to deliver up to 5,000 new affordable social homes. This comes in the form of a top-up to the existing AHP, which runs from 2021 to 2026.

 

Details of the new investment to succeed this programme will be set out at the Spending Review, the government said.

 

This is intended to lay the foundations for Labour’s manifesto commitment to “deliver the biggest increase in social and affordable housebuilding in a generation, and to support councils and housing associations to build their capacity and make a greater contribution to affordable housing supply”.

 

It will deliver a mix of homes for sub-market rent and homeownership, with a particular focus on homes for social rent.

 

At the end of September, when setting out the priorities for Homes England, housing minister Matthew Pennycook told the agency to maximise the number of social rent homes delivered through the allocation of remaining AHP funding.

 

At the National Housing Summit 2023, then-shadow minister Mr Pennycook said that, in government, Labour would make changes to the AHP to ensure that it delivers more homes from existing funding. Then, in a statement to MPs at the end of July this year, housing secretary Angela Rayner said that “more flexibilities” will be introduced in the current AHP.

 

Commenting on the new housing announcements, Ms Reeves said: “We need to fix the housing crisis in this country. It’s created a generation locked out of the property market, torn apart communities and put the brakes on economic growth.

 

“We are rebuilding Britain by ramping up housebuilding and delivering the 1.5 million new homes we so badly need.”

 

Ms Rayner said: “We have inherited a housing system which is broken, with not enough homes being built and even fewer that families can afford.

 

“This is a further significant step in our plan to get Britain building again, backing the sector, so they can help us deliver a social and affordable housing boom, supporting millions of people up and down the country into a safe, affordable and decent home they can be proud of.”

 

The government said it is also supporting the delivery of 33,000 new homes through £128m for housing projects across the country. 

 

Its housing strategy is due to be announced in the spring as part of the government’s Spending Review.

Sector reaction

 

Kate Henderson, chief executive of the National Housing Federation, said the housing body “strongly” welcomes the £500m top-up to the AHP and also welcomes a consultation on a new rent settlement.

 

“This vital injection of funding, which we’ve been urgently calling for, will support housing associations to continue to deliver much-needed affordable homes in the immediate term and prevent a collapse in delivery,” she said.

 

“We share the government’s ambition to build 1.5 million homes over this parliament and stand ready to deliver the social homes needed, which is why we welcome a consultation on a new rent settlement. This will provide both transparency for residents and long-term certainty and financial stability for social housing providers. We also support the government’s decision to review Right to Buy discounts.

 

“To achieve the affordable homes needed across the country, alongside this short-term top-up, we look forward to a new long-term housing strategy announced at the next Spending Review, including a significant boost in funding for social housing.”

 

Rachael Williamson, head of policy and external affairs at the Chartered Institute of Housing, said: “We welcome the government’s recognition of the need for urgent investment in affordable housing and additional funding to sustain the Affordable Homes Programme ahead of further support at the Spending Review.

 

“The promise of a rent settlement is positive, but a 10-year agreement is arguably needed to enable housing providers to plan effectively for the affordable homes our communities urgently need.

 

“Alongside funding, we welcome reforms to Right to Buy, as we have long called for. We look forward to contributing to the government’s forthcoming housing strategy to support policies that bolster housing supply, quality and security.”

 

Fiona Fletcher-Smith, chair of the G15 and chief executive of L&Q, said the group of London’s largest social housing providers has been “very encouraged” by the new government’s prioritisation of housing.

 

She said the measures that will be announced in the Budget this week are a “welcome boost that demonstrate a real determination to fix the housing crisis”.

 

“Key for G15 members is long-term certainty and financial stability in order to increase the supply of desperately needed new homes in London,” Ms Fletcher-Smith said.

 

“The consultation on a five-year rent settlement for social housing providers is a useful first step, but not the full measure that was urgently needed in this Budget. Not-for-profit housing associations need a 10-year deal to provide the long-term stability and confidence required to help deliver the government’s target of 1.5 million homes in this parliament.

 

“We welcome the extra £500m pledged to the Affordable Homes Programme in the short term, which will help deliver new homes. We particularly look forward to the announcement of a long-term Affordable Housing Programme in the spring, when the government sets out its housing strategy.”

 

Tracy Harrison, chief executive of the Northern Housing Consortium, welcomed the announcements.

 

She said: “The £500m top-up for the Affordable Homes Programme will mean our members can continue building and is something we advocated for strongly in the run-up to the Budget. 

 

“A five-year CPI plus one per cent rent settlement (with a consultation including a 10-year option) will give housing providers more certainty to plan investment. Changes to Right to Buy should help stem the loss of social homes.

 

“These are all great first steps, but there’s lots of work to do to in the run-up to the Spending Review and through the rent consultation. Our members need long-term financial certainty to improve the quality of existing homes, including making them warmer and greener, and to deliver new homes on the scale required to meet government ambitions.”

 

Clare Miller, chief executive of Clarion Housing Group, welcomed the announcement of additional funding and the government’s commitment to long-term rent certainty for the social housing sector.

 

“We share this government’s ambition to make sure everyone has the foundation of a safe, secure and affordable home and this announcement will help make that a reality,” she said.

 

“At Clarion we have in excess of 20,000 new homes in our development pipeline and a long-term rent settlement will give us the certainty we need to deliver these.

 

“Major investment in social housing via the Affordable Homes Programme will mean more affordable homes for those that desperately need that safe and secure foundation. We are ready to work with the government to realise our shared mission, which will lead in turn to better health outcomes, better education outcomes and better employment outcomes.”