Government announces £2bn in extra funding to deliver social and affordable homes

The government said the new investment will also unlock development and opportunity on sites that are ready and waiting for “spades in the ground” in places such as Manchester and Liverpool.

Chancellor Rachel Reeves outlined the plans on Monday during a visit to an affordable housing site in Stoke-On-Trent with Angela Rayner, deputy prime minister and housing secretary.

Ms Reeves said: “We are fixing the housing crisis in this country with the biggest boost in social and affordable housebuilding in a generation.

“Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people’s pockets.

“At the conclusion of the current Spending Review process on 11 June 2025, the government will announce further long-term investment into the sector in England, delivering the biggest boost to social and affordable housing in a generation.”

Ms Rayner said: “Everyone deserves to have a safe and secure roof over their heads and a place to call their own, but the reality is that far too many people have been frozen out of homeownership or denied the chance to rent a home they can afford thanks to the housing crisis we’ve inherited.

“This investment will help us to build thousands more affordable homes to buy and rent, and get working people and families into secure homes and onto the housing ladder. This is just the latest in delivering our Plan for Change mission to build 1.5 million homes, and the biggest increase in social and affordable housing in a generation.”

The £2bn follows the government announcing £800m in further investment to the Affordable Homes Programme since gaining power during the general election. This comprised £500m during the Budget in October 2024 and a £300m top-up last month.

The latest top-up also comes after the government announced £600m worth of investment on Monday (24 March) to train up to 60,000 more skilled construction workers to tackle skills shortages and get more young people into jobs.

Sector reaction

Kate Henderson, chief executive of the National Housing Federation, said that the funding top-up is “hugely welcome and demonstrates the government’s commitment to delivering genuinely affordable, social housing for families in need across the country”.

“The additional £2bn will prevent a cliff edge in the delivery of new homes, ahead of the next funding programme being announced,” she added.

“Social housing is the only secure and affordable housing for families on low incomes, and the dire shortage has led to rocketing rates of poverty, overcrowding and homelessness.

“Investment in social housing is not only key to tackling the housing crisis, but is also excellent value for money, reducing government spending on benefits, health and homelessness, as well as boosting growth. Housing associations are ready to work with the government to deliver a generation of new social homes.”

Gavin Smart, chief executive of the Chartered Institute of Housing, said the £2bn in funding is “very welcome and will help sustain momentum before the current Affordable Homes Programme comes to an end”.

He added: “This investment signals recognition from government that bold action is needed to boost supply and ensure that everyone has access to a decent, safe and secure home. It is vital that it forms part of a longer-term, strategic approach to delivering the scale of truly affordable social rented housing needed.”

Mr Smart said he is pleased the government sees this new funding as a “down payment” ahead of more long-term investment later in the year.

“We look forward to further details on the upcoming long-term investment strategy due in June, and will continue to advocate for a sustained commitment to social and affordable housing as a national priority,” he said.

Fiona Fletcher-Smith, chief executive of L&Q and chair of the G15, welcomed the “significant funding boost”.

“The government has listened and recognises that sustained, long-term investment is critical in giving not-for-profit housing associations the certainty needed to help deliver the ambitious target of building 1.5 million new homes and ultimately ending the housing crisis,” she said.

“We look forward to further announcements at the Spending Review, enabling us to make long-term investments in new homes – particularly in areas like London where the need is most acute – and continue investing record amounts in improving existing properties."

Tracy Harrison, chief executive of the Northern Housing Consortium, said that this £2bn top-up is “very welcome”.

She added: “It will mean our members can continue to build much-needed social homes at a time when housing waiting lists and homelessness are rising in the North. We are pleased that even in challenging times, the government is prioritising making sure everyone has a good-quality, affordable, safe home. 

“We look forward to details of the new longer-term programme at the Spending Review.”

Ian Fletcher, director of policy at the British Property Federation, welcomed the funding announcement, but said the scale of the challenge “remains immense”. He said that delivery in many cases will remain closely tied to that of the wider housing market.

“That’s why it is vital that the government adopts a multi-tenure approach to delivery and focuses on areas like build-to-rent, supporting forms of intermediate housing such as discount market rent, which are not dependent upon sales absorption rates,” he explained.