2025 SPRING STATEMENT FALLS SHORT ON COMMITMENTS TO AFFORDABLE HOUSING DELIVERY SAY HARRIS LAMB’S RESIDENTIAL LAND SPECIALISTS

With Chancellor Rachel Reeves having announced a £2 billion package of new grant funding to deliver up to 18,000 new social and affordable homes as part of the Government’s 2025 Spring Statement, Residential Land experts at Harris Lamb have said that the measures still don’t go far enough to give the housebuilding industry the certainty it needs to stimulate additional investment.

Ken Phillips, Director of the business’ Residential Land team, said that in turn, this will impact the volume of affordable homes delivered across the UK in the coming years.

He stated that while the £2 billion of new funding is welcome news, it is a fraction of what is required to support development on sites that will deliver in this Parliament, helping the government to, “get within touching distance” of its 1.5 million housebuilding target over its five-year term and that the Housing Industry still needs more long-term certainty on funding for affordable housing to meet current commitments, let alone growth.

Ken said: “The current affordable housing delivery is around 60,000 per annum, so supporting 18,000 new homes is poor, and the level of commitment required to stimulate investment is more like ten times that figure.

“Not only that, but all projects funded through this £2 billion will need to start by March 2027 and finish by June 2029, with the majority of funding falling in 2026-27, following the government’s current Affordable Homes Programme which is due to end next year,” he said.

Ken said his key concern remained the crisis surrounding affordable homes delivery through S106 Planning Agreements and that an urgent focus on addressing S106 delivery and funding certainty was essential to ensure the industry could live up to expectations.

“With many developments stalled or in danger of stalling through reduced interest from Registered Providers, the situation is more critical than ever. Private developments typically have performance measures related to the delivery of affordable housing secured through planning agreements with the developer.

“However, if there is no housing association to transfer these properties to, developers will suffer financially and may have to suspend construction, putting negative pressure on housing delivery and must be addressed by the Government.

“To achieve that, the Government needs to reinstate the link to funding being used to support affordable housing delivered through S106 Agreements as well as outlining future funding streams generally at the earliest opportunity to bring reassurance and security to the sector as a whole,” he said.

The business has previously suggested a number of alternative initiatives that could address S106 delivery, including alleviating Registered Providers’ financial positions via grant funding to support S106 bids that would generate increased social rent revenue, and the establishment of a fund to support S106 delivery utilising the unspent contributions toward such schemes currently held by Local Authorities.

“There may not be an easy solution to an increasingly critical situation, but there are solutions. The key to making them work is to pool suggestions and resources and share the same endgame,” said Ken.