Chancellor Rachel Reeves will centre today’s spending review on a £39bn affordable housing investment, the largest such commitment in a generation.
Arguing that the Government is “renewing Britain”, the Chancellor will acknowledge that “too many people in too many parts of the country are yet to feel it”, adding, “This government’s task – my task – and the purpose of this spending review is to change that. To ensure that renewal is felt in people’s everyday lives, their jobs, their communities,”
The funding will support local authorities, housing associations and private developers over the next 10 years, with annual affordable housing investment almost doubling to £4bn by 2029–30, up from £2.3bn between 2021 and 2026.
“This is the most ambitious affordable homes programme in decades,” says Kate Henderson, chief executive of the National Housing Federation, “It will kick‑start a generational boost in the delivery of new social homes.”
Melanie Leech, British Property Federation chief executive, said, "With really tough choices to be made in the Spending Review, we are delighted that the Government has prioritised the delivery of affordable and social housing and that it is investing significant additional sums to support a sector that has faced tough headwinds in recent years,"
Mairi MacRae, director of campaigns and policy at Shelter, notes the scale and timing. “This increased investment is a watershed moment in tackling the housing emergency. It’s a huge opportunity to reverse decades of neglect.”, she said.
However, analysts warn that the housing sector must move quickly to meet goals. Savills reports that only 180,700 homes were delivered in the year to March 2025, far short of the 300,000‑a‑year pace needed for the 1.5m homes target.
Housing providers have also called for affordable housing to be reclassified as critical infrastructure, which would allow capital investment without breaching fiscal rules. Six regional housing associations warned that without that change, delivery of the pipeline risked delay.
The announcement, which follows tense negotiations between Housing Secretary Angela Rayner and the Treasury, also includes several structural changes aimed to address barriers to delivery, such as a 10‑year social rent settlement that lets social landlords raise rents at 1 % above inflation for the duration of the funding package.
"The Government has delivered the 10-year rent settlement, which we and the wider sector have been advocating for a long time," explained Melanie Leech. "This is a significant step forward to help the sector to plan with more certainty and to help unlock the huge amount of long-term private capital, such as pension funds, that wants to invest in genuinely affordable homes.”
Additionally, a revised planning bill, just cleared by MPs, will ease building restrictions. However, environmental advocates warn it could threaten sensitive habitats. Rough sleeping will also be decriminalised next year under government plans to scrap the 200-year-old Vagrancy Act of 1824, with Deputy Prime Minister Angela Rayner saying, “We are drawing a line under nearly two centuries of injustice towards some of the most vulnerable in society, who deserve dignity and support.
“No one should ever be criminalised simply for sleeping rough, and by scrapping this cruel and outdated law, we are making sure that can never happen again.”
However, last night's Treasury’s statement did not mention the reported proposals to redesignate Homes England as a public finance institution. The plan, informally described by insiders as a ‘housing bank’, would allow the agency to generate financial assets through large-scale lending or investment activity.
Sources familiar with the proposal say the change could enable Homes England to channel more funding into the housing sector while reducing capital costs for developers.
