Social Housing Speed Read – Spending Review 2025: A Boost for Social Housing Providers
12th June, 2025
On 11 June 2025, Rachel Reeves announced the Government's 2025 Spending Review (SR25), which sets out its ambitious plans to invest in Britain's security, health, and economy.
SR25 aims to deliver on the Government’s Plan for Change, including its target of building 1.5 million new homes by 2029. To achieve this target, the policy paper promises what may be the most significant boost to affordable housing spending in a generation.
In a nutshell, SR25 promises the following economic reforms in the housing sector:
- £39bn worth of grants will be provided to local authorities, private developers, and housing authorities over the next decade as part of the Government’s 2026-2036 Affordable Housing Programme. This nearly quadruples the grants provided under the previous Affordable Housing Programme (£11.8bn).
- There will be a 10 year rent settlement, which will allow social landlords to raise rents by the Consumer Price Index plus 1% per year. The Government also intends to launch a consultation on implementing social rent convergence, which would enable lower rents to rise more quickly to match higher rents on other properties.
- £2.5bn worth of low interest loans will be given to social housing providers to invest in the development of affordable housing. Additionally, social housing providers will be given equal access to the Building Safety Fund, which will provide £1bn of funding to fix building safety issues. The Local Authority Housing Fund, which aims to increase the supply of temporary accommodation, will also receive a £950 million cash injection.
Overall, the Government anticipates that spending on affordable housing will reach £4bn per year by 2029-2030, and will rise with inflation subsequently. Criticisms of this ambitious target include that the Government’s aim to deliver more affordable housing cannot be achieved by spending alone; it will need to be accompanied by a significant recruitment drive and upskilling of staff in the social housing sector. Nevertheless, it marks a large step in the right direction.
In particular, a 10 year rent settlement will enable social landlords to stay ahead of rising costs, improving rental yield and the capital value of their affordable housing stock. It will also enable greater certainty for income projections, which will help social housing providers to develop clear long-term business plans going forward and provide them with confidence to invest in new development. Low interest loans will increase the range of funding options available to purchase new units from private developers.
SR25 will, on its face, provide a significant financial boost for social housing providers. It shows that the Government has listened to the sector, emphasising its importance to the infrastructure of this country.
If you would like to discuss the potential impact of these reforms, or have any queries as to how they might affect your delivery plans, please contact our expert Social Housing lawyers.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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