The government has in its annual spending review announced what the Chancellor of the Exchequer called the “biggest cash injection in 50 years” into the social and affordable homes.
It includes a 10-year rent settlement, a £39 billion Affordable Homes Programme and a consultation on rent convergence as it looks to meet its ambitious 1.5 million new homes target. It will provide certainty for social housing providers and funders investment in delivering new housing.
Ruby Giblin, Partner in Winckworth Sherwood’s dedicated Housing Finance practice commented on the announcement;
“Today’s spending review gives housebuilders and social housing providers plenty to cheer. The 10-year rent settlement at inflation plus 1% is a bold and welcomed move that will provide certainty for social housing providers and funders.
“But for it to have real and lasting impact it must survive a possible change of government at the next General Election, and that is not guaranteed.
“The consultation on rent convergence will be welcomed by social housing providers and local authorities. Social housing rents often reflect when a home was built, different rent policies and changes in subsidies, meaning rents can vary enormously for homes of the same size and in similar locations.
“Addressing rent convergence will provide social housing providers significant additional revenues to develop new homes and buy up thousands of new units already built by private developers as part of their affordable housing commitments.
“Together with the £39 billion Affordable Homes Programme, the Government has made clear that is serious about new and affordable homes across the UK. However, as with all significant government announcements, the devil will be in the detail. What, for example, will today’s announcement mean for those developing shared ownership homes.”