The Autumn Budget: What is means for Affordable Housing

Author: Jake Farmer - Associate Planner

Chancellor of the Exchequer Rachel Reeves delivered the much anticipated first budget of the new Labour Administration last week. Whilst there was the usual political posturing and, of course, a healthy number of jibes to “the party opposite”, there were some very important takeaways for those of us operating in the affordable housing sector and indeed, the housing sector more widely.

Before I look into the key announcements of relevance, I think it’s key to point out that the announcements contained very few surprises from a planning and housing perspective, ?as the Labour manifesto and Written Ministerial Statement of July 29th issued by Secretary of State Angela Rayner indicated a clear direction of travel in terms of expressing the critical need for affordable housing and housing more generally following years of under delivery.

Nonetheless, the headlines from the Autumn Budget announcement make good reading for those in the sector, with announcements of some much-needed injections of funding for affordable housing providers in order to address the desperate need for genuinely affordable housing.

The sector has seen a stark decrease in the delivery of social housing over the last few years, due to the much reported ‘perfect storm’ of funding constraints, increasing interest and construction costs as well as the significant cost of reparations required to them of existing stock in response to changes in legislation.

Affordable Homes Programme Top-Up

Arguably, the main headline ?of the ￡500 million top-up to the Affordable Homes Programme is hugely welcome in relieving the funding constraints that are preventing the ongoing delivery of social housing. The Affordable Homes Programme (AHP) 2021 to 2026 provides grant funding to support the capital costs of developing affordable housing in England such as land costs, construction costs consultancy services fees and planning obligations.?Homes England?has ￡7.39 billion of government funding to deliver up to 130,000 affordable homes outside of London by the end of March 2026.

The AHP offers funding for Affordable Housing on a grant basis with affordable housing providers applying for funding. Providers can take the form of Local Councils, Registered Providers, Consortiums from the private sector, Strategic Partnerships (both not-for-profit and for-profit) among many other vehicles in entering into grant agreements to secure funding.

The thought process being that a top-up of the AHP budget would allow for affordable housing schemes to become more viable, due to an increase in the funding available. However, many projects in the pipeline to be delivered have stalled or been shelved due to financial issues. Logic would dictate that funding should be made available to those projects given the previous sunk costs already incurred by the early stages of projects but grant agreements would have to be extended or re-applied for which could cause some issues in unlocking affordable housing development.

Right to Buy Discounts

Similarly, the review of the Right to Buy Discounts is also welcome and has the potential to make more money available to reinvest in the delivery of more affordable housing units and, indeed, the upgrading of the existing housing stock.

Additional Grant Funding

Likewise, the confirmation of additional investment to boost Local Authority capacity with ￡1.3 billion of grant funding aiming to relieve pressures in social care and homelessness is also a promising step in the right direction. Whilst the aforementioned ￡500m boost to the AHP has been allocated explicitly for the delivery of affordable housing, the ￡1.3bn in grant funding is intended to support and increase the capacity of Local Authority services in social care, which encompasses adult social care, carers allowance, supporting those with disabilities, residential care, supported living, among other things.

Reflections – A step in the right direction?

Whilst there is much to be positive about the first Labour Autumn budget in 14 years, we hope that this only represents the beginning of continued support and investment for the sector from the central government, in order to deliver the manifesto pledge of building 1.5 million homes. There is still an overwhelming reliance on large-scale housebuilders to deliver, or at least make financial contributions towards, the new affordable housing units that are so desperately needed. To address this, more continued support is needed for Housing Associations and Local Authorities to deliver more housing, particularly for social rent.

The shortfalls that we have seen in the delivery of affordable housing in recent years are such that only continued investment in the sector and related industries by both central Government and the private sector is the way to tackle the housing crisis. ?This funding will help Housing Associations to start purchasing S106 units again and bringing forward land themselves for housing.

Positivity in the sector has been in short supply in recent years and the announcements in the Autumn budget should at least restore some of that positivity. The ￡500m boost to the AHP 2021-2026 is very much central to seeking to ‘re-start’ the delivery of affordable housing across the country, possibly bringing development, previously considered to be unviable back to the table. Likewise, the ￡1.3bn in funding for Local Authorities in providing social care services goes hand in hand when we consider that the headline objective of the Autumn Budget was to attempt to relieve poverty in the country.

However, funding is only one half of the equation and will only have the effect of delivering more affordable housing on the ground if the planning system is able to deliver the planning permissions required.? In that sense we will be keeping a close eye on the Government’s proposed changes to the NPPF – particularly the requirement for 50% affordable housing on ‘Grey Belt’ sites to see whether the does actually result in more affordable homes coming forward.?

Ultimately, this effort has to be supported continuously by ongoing funding through the AHP to affordable housing providers, particularly given that material and construction costs show no signs of falling significantly anytime soon. In summary, therefore, it’s a good start, but, then again, it is just that. A start. With affordable housing delivery aspirations set so high, and rightfully so, those in the affordable housing sector will be keen for more of the same.