Social housing renewal: first steps for the new government

Housing associations are ready to work with the new government to deliver new homes, growth, investment, decarbonise existing homes and end the housing crisis for good.

Housing associations already develop a quarter of all new homes in England. With the right funding and support, we could do so much more. A long-term plan, partnered with new policies and funding, would drive economic growth around the country and will be essential to achieving the government’s target to build 1.5 million new homes.

Research from Shelter and the National Housing Federation, carried out by CEBR, shows that building 90,000 social rented homes would add £51.2bn to the economy.

Most of this impact would happen quickly –£32.6bn would be generated within a year of building the homes, supporting almost 140,000 jobs. Within three years, the programme would break even, with the wider economic benefits surpassing the upfront cost of building, largely by boosting the construction industry. For every £1 of public grant housing associations would unlock £4 of private investment.

We welcome the steps the Chancellor has already announced to strengthen the planning system and unlock new housebuilding. Housing associations are ready to play their part. But we are starting from a fragile financial position. Rental income is 15% lower in real terms than in 2015, and spending on maintaining and improving homes has hit record highs, with investment increasing by 20% in both 2022 and 2023. Additionally, we need to invest an average of £40-50k per home by 2050 to ensure they are safe, high quality, decarbonised, and meet new regulatory requirements.

Many organisations are having to develop fewer new homes this year in the face of these substantial financial pressures and policy uncertainty.

Given these financial and operational pressures, this document puts forward the first steps for the new government to quickly boost confidence, rebuild capacity and unlock investment. We’ve then outlined the framework needed for a significant increase in delivery from housing associations, to meet the goals of a wider long-term plan for housing.

Step 1: reset the relationship between the government and housing associations and increase long-term certainty and confidence

As a first step, an early and high-profile commitment from the new government to ensure the long-term sustainability of social housing will provide housing associations with the confidence to plan for the future. This commitment from the government would kickstart a partnership and could happen before a major fiscal event. The first steps should include:

A commitment to a 10-year rent settlement with annual increases capped at CPI+1%and a fair and consistent approach to convergence. Details could be consulted on in the Autumn for implementation from April 2025. Ten years of rent increases at CPI+1, plus convergence, would give social landlords the certainty they need to plan investment over the long-term and would mean rents are affordable for tenants and still lower, in real terms, than they were in 2015.
A rapid boost to the Affordable Homes Programme, extending the current programme by one year, with a funding boost, a shift towards social rent, and greater flexibilities around grant rates, regeneration and s106 funding. It should be accompanied by a commitment to further funding in a new programme from 2026, to be confirmed in the spending review and with details consulted on during 2025.
Boosting the SHDF Wave 3 in line with Warm Homes Plan spending ambitions and quickly rolling it out to ensure vital work to existing social homes can continue at pace.
Commit to widening access to the Building Safety Fund to cover social housing, with details to be set out in the Autumn. Urgently review the timeframe for introducing additional regulatory requirements, prioritising successful adoption of the new consumer standards framework and Tenant Satisfaction Measures. Pause other regulatory and legal changes pending a review of the social housing regulatory landscape, ensuring better outcomes for residents and consistency across social and private rented sectors.
Reverse recent changes to the planning system and set out the first steps towards wider planning reform including on strategic planning and compulsory purchase orders.
Provide emergency funding for housing-related support to local authorities in financial crisis to ensure vital homelessness and supported housing services can continue to operate.

Step 2: laying the foundations of a long-term plan through the first budget and spending review

To support housing associations to deliver significantly more new affordable homes over the next Parliament, unlocking growth and investment, the spending review should include

A new long-term Affordable Homes Programme for social rent and shared ownership, with minimum funding of
£4.6bn per year on average for the first Parliament, on a minimum five-year rolling basis.
A new long-term Social Housing Investment Fund of £2bn per year of funding for existing homes to help deliver the investment in quality and decarbonisation needed, while unlocking capacity for new supply. This would incorporate the Social Housing Decarbonisation Fund when Wave 3 ends.
Long-term, ring-fenced and increased funding for supported housing and support services which should be held nationally but distributed locally, and be at least £1.6bn per year to ensure the continued viability of vital supported housing provision.
Changes to the tax treatment of social housing investment, including the removal of VAT from refurbishment and safety works to incentivise retrofit.
Abolishing the household benefit cap and the ‘bedroom tax’ to ensure everyone can afford to pay their rent.

Step 3: what should be in a new Housing Green Paper

A new Housing Green Paper should be the first step towards a long term, outcomes-based plan for housing. It should set out the institutional changes needed to deliver this and mechanisms for scrutiny and accountability. This could include the creation of a new cross-Whitehall unit to fix the housing crisis. Some of the detailed policy it should set in motion would include:

Comprehensive, but rapid planning reform to unlock additional sites and capture a greater proportion of land value for affordable housing. This should include mandatory local housing targets, strengthening s106 and extending it to homes created under permitted development rights, greater use of public sector CPO powers, green belt reform and strategic planning, and scrapping the the previous government's Infrastructure Levy.
Consultation on the design and delivery of the next Affordable Homes Programme and our proposed Social Housing Investment Fund, with consideration of how to use funding to strategically support organisations to deliver the most they can to support social rent and shared ownership delivery, and how decision-making is shared with combined authorities.
Rapid consultation on a new Decent Homes Standard with minimum energy efficiency standards for the social sector, including robust costings and a deliverable timetable for implementation.
A review of the social housing consumer regulatory landscape to ensure that it is delivering the right outcomes for tenants, leading to recommendations on whether or how to take forward changes that are still under consultation or are yet to be implemented.
Greater autonomy and delegated powers for Homes England to deliver against a new, ambitious 10-year mission, including clarity on how it works alongside combined authorities.
Reform of funding and fiscal rules to ensure they recognise the long term economic and fiscal benefits of social housing and incentivise long term investment.
Help for local authorities and integrated care boards to plan for, fund and commission supported housing, to ensure it is part of a strategic plan to meet housing need.

Who to speak to

Sarah Finnegan, Head of Member Relations

0207 0671 188

sarah.finnegan@housing.org.uk

@sarahfinnegan80