Date Published 13 June 2025
Chancellor Rachel Reeves has used her Spending Review statement in the House of Commons to announce a near-doubling of government investment in affordable housing.
As part of the plan, social housing landlords will be permitted to increase rents above inflation for the next decade. Reeves unveiled a £39 billion commitment over 10 years to support the development of social housing by local authorities, housing associations, and private developers. This equates to an average of £3.9 billion per year—significantly higher than the £2.5 billion allocated annually under the 2021–2026 programme. 'Social housing has been neglected for too long—but not by this Labour government,' Reeves told MPs. 'Our new Affordable Homes Programme, backed by £39 billion over the next decade, will provide direct government funding to support housebuilding, especially homes for social rent. I'm pleased to report that towns and cities including Blackpool, Preston, Sheffield, and Swindon already have plans to submit bids to build new homes.'
Furthermore, as part of the reforms, social landlords will be allowed to raise rents by 1% above the Consumer Price Index (CPI) rate of inflation annually for the next 10 years—twice the duration of the five-year period announced by Reeves last year. Additionally, the government is consulting on the reintroduction of rent convergence, a policy that enables lower social rents to rise faster to bring them in line with similar properties. This approach, scrapped by the Conservative government in 2015, aims to create greater consistency in rent levels across the sector.
Reaction to the Spending Review has been mixed. The National Residential Landlords Association (NRLA) offered a critical response, with chief executive Ben Beadle stating: 'The Spending Review does nothing to tackle the immediate pressures in the private rented sector. It fails to support the delivery of the one million new private rented homes needed by 2031 to meet rising demand. It also overlooks the urgent need for investment in energy efficiency and leaves struggling renters without additional support due to the continued freeze on housing benefit rates.'
In contrast, the letting agents' trade body Propertymark was more positive. Timothy Douglas, head of policy and campaigns, said: 'Investment in rejuvenating communities across the country is welcome. It helps create places where people want to live, work, and thrive. We also welcome the additional funding for affordable and social homes, which will support the UK Government's housing targets and help ease pressure on the private rented sector by making renting more affordable overall.'
With the response to this announcement being of diverse opinion between the different bodies and associations throughout the property sector, it will be interesting to see how this progresses and comes into effect; nonetheless, Adams Estates will ensure to keep all of our clients informed of any further developments or proposed changes which seems to be a common trend from our government in recent years.
