By Charles Ferguson-Davie and Marc Gilbard
Yesterday’s Spending Review contained some relevant news for the real estate industry. In particular, the Chancellor unveiled a £39bn Affordable Homes Programme (AHP) and a 10-year rent settlement. The new AHP will span 10 years, averaging £3.9bn per year, up from £2.5bn annually in the 2021–26 programme. The rent settlement allows social housing rents to rise by CPI + 1% annually for 10 years – doubling the previous 5-year proposal. The government will also consult on reinstating social rent convergence, a policy to equalize rents across similar properties.
There’s no confirmation yet on whether Homes England will be restructured as a “housing bank” (public finance institution) or whether housing will be reclassified as critical infrastructure – potential move to unlock further investment but £4.8bn has been confirmed for Homes England to use to catalyse additional private investment in delivering new homes.
However, in order to meet the Government’s ambitious target of delivering 1.5 million new homes by the end of this Parliament, more will need to be done to support the under-resourced planning system and to ensure that taxes and well-intentioned regulations, such as with regard to Building Safety and net zero, do not frustrate development.
We encourage the government to continue to consider how reforms to the UK’s planning and taxation systems can best harness the growing weight of institutional capital interested in the UK residential-for-rent sector.