According to the government, the £500m to deliver thousands of new social and affordable homes is a top-up to the existing Affordable Homes Programme and comes ahead of next Spring's Housing Strategy.
The new funding brings the total investment in housing supply to over £5bn and further supports the delivery of 33,000 new homes through £128m for housing projects across the country.
However, the sector will have to wait until next Spring's spending review for details of affordable housing funding post-2026.
It will deliver a mix of homes for sub-market rent and home-ownership, with a particular focus on delivering homes for Social Rent.
Social housing rent settlement
The Government will also consult on a new 5-year social housing rent settlement, which caps the rents social housing providers can charge their tenants, to provide the sector with the certainty it needs to invest in new social housing. The intention would be for this to increase with Consumer Price Index inflation figures and an additional 1%.
Despite this, there had been reports that the AHP could get a £1bn top-up, and many social housing providers had hoped for a 10-year guarantee on rent increases.
Rachael Williamson, head of policy and external affairs at the Chartered Institute of Housing, said: “Long-term certainty is essential for the social housing sector to effectively plan and invest so the introduction of a 5-year rent settlement is welcome.
"However, to fully support effective planning and sustainable investment, a 10-year settlement is needed. This level of certainty would empower housing providers to make the long-term commitments required to deliver the affordable homes that our communities urgently need and provide greater transparency for residents.”
Omer Fazal, Managing Director and Head of Real Estate at international corporate finance firm Centrus, said: “Though the news of an extra £500m for the Government’s Affordable Homes Programme is welcome, the scale of ambition set out by Labour is going to require a new approach to meet the 1.5m housebuilding target.
“Significant challenges over the past few years have stunted growth despite strong demand, leading to a tight lending landscape and stretched housing associations. For Profit Registered Housing Providers (FPRPs) are going to have a larger part to play in providing affordable housing, which will offer opportunities for both investors and housing providers.
"However, private capital can not solely plug any subsidy gap that currently exists, so investors will have to assess appetite and identify areas in the market where partnerships as well as long-term rent settlement policy can bring worthwhile benefits for themselves, housing associations and local authorities - which could be key to unlocking housebuilding potential."
