The Government has made a landmark £2bn investment to deliver up to 18,000 new social and affordable homes as part of its Plan for Change, aiming to address the housing crisis and provide greater security for working families.
The grant funding injection was revealed by Chancellor Rachel Reeves and Deputy Prime Minister Angela Rayner.
The funding will be used exclusively for development on sites that will deliver homes within this Parliament, with construction starting by March 2027 and completing by June 2029.
The investment will support projects in areas with high demand for affordable housing, including Manchester and Liverpool, with a focus on boosting local economies by creating jobs, improving infrastructure, and expanding homeownership opportunities.
The £2bn represents an initial downpayment from the Treasury, with further long-term investment into social and affordable housing expected later this year, covering 2026-27 and future years.
The funding is intended to prevent a ‘cliff edge’ in housing delivery by bridging the gap between the current Affordable Homes Programme (2021-26) and the next funding cycle, which will be announced at the Spending Review on 11th June 2025.
The Government urged housing providers to submit bids and come forward with ‘shovel-ready’ projects to accelerate the supply of affordable homes.
Reeves said: “We are fixing the housing crisis in this country with the biggest boost in social and affordable housebuilding in a generation.
“Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people’s pockets.”
Rayner said: “Everyone deserves to have a safe and secure roof over their heads and a place to call their own, but the reality is that far too many people have been frozen out of homeownership or denied the chance to rent a home they can afford thanks to the housing crisis we’ve inherited.
“This investment will help us to build thousands more affordable homes to buy and rent and get working people and families into secure homes and onto the housing ladder.
“This is just the latest in delivering our Plan for Change mission to build 1.5 million homes, and the biggest increase in social and affordable housing in a generation.”
Reactions:
Kate Henderson, chief executive at the National Housing Federation:
“This funding top-up is hugely welcome and demonstrates the government’s commitment to delivering genuinely affordable, social housing for families in need across the country.
“The additional £2 billion will prevent a cliff edge in delivery of new homes, ahead of the next funding programme being announced.
“Social housing is the only secure and affordable housing for families on low incomes, and the dire shortage has led to rocketing rates of poverty, overcrowding and homelessness.
“Investment in social housing is not only key to tackling the housing crisis, but is also excellent value for money, reducing government spending on benefits, health, and homelessness as well as boosting growth.
“Housing associations are ready to work with the government to deliver a generation of new social homes.”
Charlie Nunn, CEO of Lloyds Banking Group:
“A safe and lasting home is the foundation for good lives and livelihoods, and we welcome this boost to building much-needed social and affordable homes.
“As the UK’s biggest commercial supporter of social housing, we’re working across the private, public and community sectors to help increase provision of good quality, genuinely affordable housing for those in need.”
David Thomas, CEO at Barratt Redrow:
“To increase construction activity and build the homes the UK desperately needs, we need support for demand across all tenures.
“As well as providing more much-needed affordable homes, this welcome investment will help unlock mixed-tenure developments and to create jobs and economic growth across the country.”
Stephen Teagle, chair of The Housing Forum:
“This additional funding signals that the Government is listening to the sector and reaffirms its strong commitment to accelerating the delivery of much-needed affordable housing while driving economic growth.
“It represents an unprecedented intervention which, when paired with sustained, long-term investment, will be instrumental in meeting the growing demand for affordable homes.
“Now, it’s up to the industry to rise to the challenge – accelerating delivery, building momentum towards the government’s target of 1.5 million new homes, and ensuring we provide the housing this country urgently needs.”
