Chancellor Rachel Reeves has confirmed a £39bn package for affordable housing over the next decade.
As part of the Spending Review, the Government has announced £39 billion for a new Affordable Homes Programme (AHP) over 10 years.
By the end of this parliament, in 2029/30, the Government will be spending £4 billion per year, nearly double the average spending commitment from the previous AHP which amounted to £2.3 billion per year.
The AHP provides funding for social and affordable homes to rent, as well as homes for affordable ownership, which includes shared ownership and Rent to Buy.
Alongside this, a ten-year social rent settlement of CPI+1% from 2026 will provide long-term certainty for housing providers to be able to borrow and invest in new and existing homes.
The government also confirmed its Warm Homes Plan will receive the £13.2 billion promised in the Labour Party’s manifesto. The plan will provide funding for home energy efficiency projects, including insulation and heat pump installation.
Speaking during today's Spending Review, Reeves said she is "proud to announce the biggest cash injection into social and affordable homes in 50 years", adding: "Direct government funding to support housebuilding, especially for social rent and I am pleased to report that towns and cities including Blackpool, Preston, Sheffield and Swindon already have plans to bring forward bids to build those homes in their communities."
Industry experts praised the government's commitment to tackling the housing crisis, but others warned that without structural changes, council-led delivery, and proper workforce planning, it risks falling short.
"A strong step forward"
Leeds Building Society's CEO, Richard Fearon, said: “We welcome the government’s bold and long-term commitment to tackling the housing crisis outlined in today’s Spending Review. The investment into the Affordable Homes Programme, including the commitment to social rent, alongside plans to accelerate delivery and improve energy efficiency, is good news for renters, first-time buyers, and homeowners across the country. It’s a thoughtful plan that won’t solve every issue overnight, but it’s a strong step forward and we’re ready to work with the government and support our members to help bring it to life.”
Alex Slater, Rightmove's housebuilding expert, commented: "Today's news is a really positive boost for the housebuilding industry and a step in the right direction. There aren't enough affordable homes, so we welcome any initiatives that will help the sector to deliver more of these homes to market. What will be key is making sure more affordable homes are delivered in the right places, where the gap in supply and demand is greatest. Hopefully this is one of many steps to come to support the delivery of much needed homes across the country."
Jonathan Pearson, director at Residentially, agreed: “This new funding delivers the clearest signal yet that the Government understands the scale of the challenge facing the country’s affordable housing providers. The housing associations I work with have always stressed that they stood ready to scale up their efforts in line with the Government’s own ambitions, but they first needed to know how much money was available and how it would be allocated. Today’s announcement goes a long way towards answering that call.
“While we’re still awaiting further clarity around how and when this funding will be allocated, they can at least begin to plan multi-phase schemes, secure land, and mobilise supply chains with confidence and at the pace required to help meet the 1.5 million homes target. Not-for-profit housing associations are also forced to make every penny count when it comes to the number of new homes they can afford to take on, so longer-term certainty on rent is also going to be important when it comes to their developing their plans.”
Richard Donnell, executive director of research at Zoopla, added: "Increased investment in affordable housing is vital to support the ambitions to build 1.5m homes. The nation can't spend its way out of the housing crisis and while more money is going in, the costs of development are rising faster than sales values which is reducing the viability of building homes. Building the homes the nation needs requires the implementation of the full spectrum of planning reforms, more investment in affordable homes and further demand side support for new home buyers."
"We can’t just pump money in, we need the system ready to deliver"
Tony Hall, head of business development at Saffron for Intermediaries, commented: “Nearly a year into the Labour Government’s term, and with the 1.5 million homes pledge looking increasingly hard to deliver, it’s really positive to see this level of investment going into affordable housing. A long-term funding commitment like this sends the right signals to developers, housing associations and lenders, and should give first-time buyers a better chance of finding a home they can actually afford.
“That said, funding is only part of the equation. The planning system remains one of the biggest blockers to delivery and, without proper reform, too many projects risk being left in limbo. If we’re serious about hitting the 1.5 million homes target, we need to look at all options on the table. Self and custom-builds are just one example of where change could unlock real progress, but only if we make it quicker and easier to get viable developments off the ground.”
Clive Feeney, Group CEO of LHCPG, said: "With more than a million households on social housing waiting lists, this is positive news for those in need of safe, high quality, affordable homes. Nevertheless, this will present a logistical headache for local authorities and put pressure on resources.
“How best to target the extra funding? What to do to speed up and guarantee delivery of these thousands of new homes? Where to find the extra contractors with the capability and capacity to do the job?
“Frameworks have never been more crucial - ensuring that local authorities get trusted contractors, who can deliver the right work, for the right price. Success in social housing is all about getting the process right.”
Elle Cass, chartered town planner and head of strategic built environment growth at SLR Consulting, agreed: “£39 billion is no small fee, it’s the single biggest commitment in today’s Spending Review and marks a clear shift in tone from the government. Compared to the last administration, this represents almost a 50% uplift in annual affordable housing investment. It shows real intent, a willingness to borrow for growth, and an understanding that stimulus is essential, something the US proved in the wake of the last financial crisis.
"But while the funding headline is positive, there are clear gaps. There’s still no dedicated social housing grant to allow registered providers to acquire or build genuinely affordable homes. That’s a missed opportunity. We urgently need a national housebuilding programme, led by council housing, to meet demand, just as we did post-war. That requires structural reform, including serious investment in planning skills. Scrapping funding for Level 7 planning apprenticeships, for example, is a backwards step at exactly the wrong time.
"Raising social rents by 1% above inflation, as reported, is also deeply concerning. At a time when private rents are already unaffordable for many, that kind of increase risks pushing more people into hardship.
"This is a major investment and a welcome signal of intent, but without structural changes, council-led delivery, and proper workforce planning, it risks falling short. We can’t just pump money in, we need the system ready to deliver. And we mustn’t forget industrial and logistics infrastructure either, they’re the foundation of a resilient economy and must be part of the conversation.”
Rob Owens, head of research at e.surv Chartered Surveyors, added: "While the government's housing funding commitment represents a significant step forward and provides essential foundations for housing delivery, truly addressing England's housing crisis requires a more comprehensive and coordinated approach. Beyond capital investment, we need strategic planning that recognises the fundamental interconnection between housing, infrastructure, and economic opportunity.
"The current challenge isn't simply a lack of funding, it's the complex web of regional disparities that see high-demand areas like London and the South East constrained by costs and affordability, while other regions with cheaper land struggle to attract developers due to limited economic prospects. This creates an uneven playing field that funding alone cannot address.
"What's needed is coordinated infrastructure planning and strategic job creation to ensure homes are built where people can genuinely thrive - not just where land happens to be available. This means addressing regional inequalities through targeted investment in transport, utilities, and employment opportunities, so that housing delivery creates sustainable, balanced communities rather than simply adding pressure to already strained areas or leaving other regions behind.
"The government's investment must be coupled with a holistic vision that considers how new housing integrates with existing infrastructure capacity and economic factors. By taking a broader view, we can ensure that today's funding translates into tomorrow's thriving communities, delivered with true regional equality and supported by the infrastructure needed to accommodate new residents successfully."
Nick Jones, mortgage sales and marketing director for Access FS, concluded: “It’s tempting to focus on the big-ticket announcements around housing – and there was certainly some good stuff in there on Homes England and social housing. But while everyone’s dazzled by the sexy stuff, Angela Rayner’s been very publicly battling to protect day-to-day funding settlement for her department, the Ministry for Housing, Communities and Local Government (MHCLG). She has been right to. While that funding is not in the spotlight, cuts there could have a major knock-on effect for levels of resourcing in local government planning support. So, while it might not grab the headlines, I’m worried reductions in local government budgets could hobble planning functions. Planning delays and under-resourced local authorities have been holding back the UK’s property market for too long – and this could make the situation worse.”
