Today was a first in a number of ways. It marked the first Labour budget in fourteen years, and the first budget ever delivered by a female Chancellor.
But it is also the most ambitious set of measures for the housing sector in quite some time, with a number of policies contained designed to get Britain building, deliver the next generation of social housing, and address some of the stark inequalities in the housing system as a whole.
Investing in delivery
The past few years have seen a slump in affordable housebuilding, particularly in the areas of highest need, with the number of homes started by London-based housing associations down by 92% this year. This is due to a number of reasons, including the increased cost of building, and also a focus on the sector’s existing stock after the passage of much-needed regulation including Awaab’s Law and the Building Safety Act.
It was therefore pleasing to see that one of the headline announcements from the Budget was a £500m top-up to the Affordable Homes Programme (AHP). This was a programme started under the last Government to deliver £11.5bn of funding to the affordable housing sector from 2021 – 26.
The additional £500m represents a 10% per annum increase in the value of the fund from 2025-6, which will be particularly useful given the aforementioned pressures on registered providers, and should hopefully allow them to top-up existing project funding as well as starting new ventures. This funding is also boosted by the confirmation of a five-year rent settlement for social housing providers, under which their rents will be able to increase by CPI +1%. This will provide much needed certainty to the sector after years of more haphazard policymaking.
What’s more, this budget saw additional funding dedicated towards more general housing delivery, including:
- £3bn in support and guarantees to increase the supply of homes and support small housebuilders.
- £128m to new housing projects to support the deliver of 33,000 homes
- A £36m investment in the planning system to boost local authority skills provision, including recruiting the 300 new planners promised in Labour’s manifesto.
Bringing existing homes up to date
The UK famously has among the oldest and leakiest housing stock in Europe. This is consequential for a number of reasons: consumers’ bills are higher, buildings emit more carbon, and homes are worse for residents’ health.
This budget saw a clear effort to address that, with a £3.4 billion investment into the government’s new Warm Homes Programme as part of the Government’s mission to bring all homes up to EPC C by 2030.
This programme will be transformational for consumers. It will significantly reduce bills and with it emissions from the built environment, and much of the retrofitting work entailed will have knock-on benefits for resident’s health.
Particularly welcoming was the £1bn dedicated to cladding remediation – this has been called for by those trapped in unsafe blocks and will meaningfully accelerate the removal of dangerous cladding.
Severely restricting the Right to Buy
The Right to Buy, the policy which enables council tenants to buy their homes at a discounted rate, has often been criticised as an unhelpful drain on social housing at the time when lists of people applying for social housing are at their highest. Since discounts were increased by the coalition in 2012, this scheme has accelerated to seeing 10,000 – 12,000 homes lost per year, which are often difficult to replace.
After a review over the summer, this budget saw the government confirm their intention to heavily reduce discounts for the Right to Buy scheme, alongside increasing the time period for a which a tenant has had to live in, and providing additional exemptions for newly built council homes.
This not only undoes some of the worst reforms made under the Coalition Government but places brand new restrictions on the Right to Buy, and so there is hope that sales may dip even below the rates of 4,000 – 5,000 seen in the latter years of the Blair-Brown Governments.
It has also been confirmed that councils will keep 100% of the receipts from sales, making it easier for them to build new homes to supplement those lost from the scheme.
Taxing housing more fairly
Finally, the budget sought to change the perverse incentives which help to drive inequality in the housing market. At present, many landlords buy up property in the private rental sector as an investment, and happily admit to seeing themselves more as investors than as professional landlords. Similarly, those who are at the lucky enough to own their own homes are able to pass a substantial amount of the value of that home to their children upon death, dividing Britain starkly between those with family property and those without.
This budget saw moves to amend this inequality, with capital gains tax and stamp duty rates for second home increased, while income tax thresholds will be unfrozen from 2028. This marks a substantial change in the tax system to prioritise those seeking to get onto the housing ladder at the expense of those who earn more than property, either as a property owner or as a landlord, while supporting those who derive income from work.
Welcome progress, but more funding will be needed
All of the money delivered in this budget is welcome, and sorely needed. But more will still be needed to achieve the government’s housing goals.
The National Housing Federation has estimated that £4.6bn per year will be needed to deliver the step change in affordable housing needed to meet Labour’s manifesto goals, nearly double of the programme inherited from the Tories.
More investment is also always welcome in directly preventing and tackling homelessness, and in reviving the Supporting People Programme ended by the Tories, but which was estimated to generate £2 for every £1 spent in supporting social housing residents.
Ministers have indicated that this is only the start of Labour’s plans to drive investment in the economy, and we will have to look to the Spending Review taking place over the winter for signals of what departmental budgets will look like in the coming years. Key priorities will be ensuring that the Local Housing Allowance and housing benefit continue to be uprated so that those at the sharpest end of the housing crisis have the support they need.
But the sector must continue to call for these changes and the spending needed to support the government’s aim of ending the housing crisis.