The government has announced plans to increase the supply of social and council housing, with the aim of reaching levels of construction not seen since the early 1980s.
A central element of the plans is a new 10-year, £39 billion Social and Affordable Homes Programme which is intended to increase housing supply, with at least 60% of new homes expected to be delivered as Social Rent.
Following yesterday’s launch of a consultation on implementing sweeping new planning powers for mayors across England, the raison d’etre for putting house building within the remit on local government is thrown into sharper focus.
The policy paper published this morning outlines several potential benefits of direct council housebuilding. Councils are democratically accountable, have knowledge of local housing needs and can reinvest rental income in housing provision.
After the Second World War, councils built large numbers of homes each year, but construction declined significantly from the 1980s following the introduction of Right to Buy and other changes to housing policy.
In an effort to increase council housebuilding, the government has reformed Right to Buy, allowed councils to retain all receipts from sales, and extended access to low-cost borrowing. These measures contributed to councils delivering their highest number of social homes in 2024–25 since records began in 1991. The government nevertheless says further investment is required.
The government has announced the first major allocations from the programme. Outside London, 33 housing providers will share £9.58 billion as Strategic Partners, with the funding intended to support the early delivery of new homes. Almost two-thirds of the homes are expected to be for Social Rent.
For the first time, three councils (Cambridge City Council, Eastleigh Borough Council and Newcastle City Council) have been awarded Strategic Partnership status. This will allow them to work directly with Homes England to deliver new council housing at scale.
London is also set to receive substantial funding, reflecting its housing needs. The Greater London Authority will have access to up to £11.7 billion over the lifetime of the programme and plans to allocate at least £6 billion during its early years. More than half of this funding is expected to support homes built directly by councils.
The initial £9.58 billion allocation represents part of the overall funding available. More than £16 billion remains to be allocated outside London, alongside around £5 billion in London. The government is encouraging councils to submit proposals for further funding.
The government is also increasing the funding limit for councils purchasing existing homes, providing additional flexibility alongside new construction. A further £46 million is being allocated to a new Capacity to Build programme, intended to help councils develop the skills and expertise required for housebuilding.
The programme also places greater emphasis on regional decision-making. In areas with established mayoral authorities, housing funding is expected to be increasingly directed by local leaders rather than central government. The government says this is intended to strengthen devolution and give local authorities greater influence over housing investment decisions.
Separately, the government is consulting on a standard template for Section 106 agreements. These agreements require private developers to provide affordable housing and other contributions as part of development projects. New national guidance has also been published with the aim of making negotiations more consistent and helping developments progress more efficiently.
In response to this announcement, Cllr Liam Robinson, Chair of the Local Government Association’s Inclusive Growth Committee, said: ‘Councils have long called for a sustained return to building genuinely affordable homes and stand ready to work with government to deliver the revival in social housebuilding.
‘The confirmed allocation of the first phase of the £39 billion fund and the increased Capacity to Build funding are positive steps to achieving this ambition.
‘Given the key role for councils in delivering these homes, it is crucial they remain at the heart of delivery. Mayors should work closely with local authorities in their areas to achieve the most from this money, with councils also having sustained access to preferential borrowing rates to support viability.’
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