Spending Review marks a big renewal for housing in the UK

The Chancellor, Rachel Reeves, presented her 2025 Spending Review (SR25) to Parliament today and, on the face of things, it was very good news for housing and investment into the sector. 

The announcements, set out below, double levels of investment and move funding to a 10-year cycle.  Shorter funding programmes (3 – 5 years) have historically been problematic for registered providers and other investment partners when looking to bring forward large-scale developments with build programmes extending beyond the grant period.  Registered providers and others will now be able to plan, acquire and build at scale over a longer horizon.  

Housing delivery is clearly a key focus of SR25, but consideration has also been given to supporting social infrastructure with more details awaited in the 10-year Infrastructure Strategy, expected later this month.  This plan will likely include a reclassification of housing as essential infrastructure, bringing it onto par with energy, transport and water/waste projects.  This is intended to allow significant additional monies to flow into the sector, from institutional investors and local authority pension funds. 

The main take aways from SR25, from a housing perspective, are listed below: 

• Delivery on the commitment to build 1.5 million homes in England (in this Parliament) through a new 10-year Affordable Homes Programme - £39 billion over 10 years from 2026-27 to 2035-36.  This follows on from the raft of reforms to the planning system which have been formally assessed as capable of adding £6.8 billion to the economy and boosting housebuilding to its highest level in 40 years by 2029-30. 
• A 10-year social housing rent settlement from 2026 (CPI + 1%). 
• Implementation of a rent convergence programme for social rents – subject to formal consultation.
• £10bn for financial investments, including those to be delivered through Homes England, to crowd in private investments and to ‘unlock hundreds of thousands more homes’.   This money is now available because of changes in debt rules.
• SR25’s announcements also included the following - some of these items were contained in the more detailed SR25 document that has now been made available by the Chancellor:
  • Social housing to have equal access to new remediation funding (totalling £1bn).
  • The launch of a permanent, UK-wide Mortgage Guarantee Scheme in July to ensure the consistent availability of mortgages for buyers with small deposits.
  • Within the overall strategy for regional growth, allocating £2.5 billion to progress the delivery of East West Rail, supporting housing developments and unlocking the potential of the Oxford to Cambridge Growth Corridor.
  • Action to address the causes of homelessness and to support local authorities in England to increase the supply of good quality temporary accommodation and drive down the use of costly bed and breakfasts and hotels, totalling nearly £1bn.  Linked to this is the announcement that housing asylum seekers in hotels is to end by 2029.
  • Within the context of infrastructure, at least £7 billion in this Parliament for a renewal of military accommodation, including over £1.5 billion new investment for rapid work to fix forces family housing.

Underlying SR25 is the recognition that, by being so interconnected with other areas associated with the Government’s economic and growth agendas - such as health, education, employment, and family well-being - investment in housing gives rise to a multiplicity of returns for both individuals and society as a whole. 

We are excited by the huge vote of confidence that has been given in the ability of all those involved in the housing world to help Government to deliver on their manifesto commitments.  The sector now needs to rise positively to that challenge, and we at Devonshires are looking forward to working alongside our clients to implement SR25’s commitments.

If you would like any further information, please contact Jonathan Corris or Triya Maicha.