The first Labour Budget of this term was delivered yesterday, 30 October 2024, by the first female Chancellor of the Exchequer. Some of the changes announced will have significant impact and will be welcomed by the housing sector. The message on the funding side was more muted and despite the big numbers set out in the speech it seems that the cards will be held close until the Spring.
Here's a snapshot of the key announcements and their potential impact.
Affordable Homes Programme - The Chancellor has committed to increase investment into the current Affordable Homes Programme by £500m to total £3.1bn. A helpful redeployment of some of the funds handed back to Treasury by the previous government. We will have to wait until the spring to hear the proposals for the new Affordable Homes Programme.
Guarantees - Government have also announced £3 billion for small developers and the Build to Rent sector in the form of housing guarantee schemes to support the private housing market. If government are targeting 1.5m homes by the end of this term, investment into Build to Rent is a no-brainer, with efficiency, quality and speed at the heart of delivering such schemes. The Government's approach to the design of the guarantee scheme – scheme specific -v- programmatic – will be a key influence in their effectiveness and speed of implementation.
Homelessness - An additional £233m injection to tackle homelessness, bringing the total spending to £1 billion in 2025-26, is a positive step forward, however, many have suggested that this is still a drop in the ocean and much more support is needed - London Councils alone are spending almost £4m per day on temporary accommodation.
Right to Buy Receipts – Local authorities are no longer required to send a portion of Right to Buy Receipts back to Treasury, and when coupled with the reduction in the discount available to tenants, Councils should enjoy the multiple financial benefits of higher receipts per sale (from the reduction in the discount), greater control over those funds and higher retention of stock given the impact of the lower discount will mean less uptake on the scheme.
Building Safety – A further £1billion investment will be made into remediation of unsafe housing but little detail has been provided as to how this will be allocated. More information is expected later this autumn.
Warm Homes – A £3.4 billion commitment over the next 3 years for decarbonisation is also good news although the extent to which this funding will impact the flagship "Warm Homes (SHDF)" funding scheme for social housing landlords is still unclear.
Extension of PWLB discounted HRA rate – Buried deep in the Budget technical notes was a confirmation that the government is extending the discounted Public Works Loan Board lending rate to local authorities for the financing of capital expenditure in their Housing Revenue Accounts until March 2026.
These measures, when combined with the consultation on long-term social housing rent settlement (CPI+1% for at least 5 years), do go some way to providing certainty for housing providers in the short term but the feel is that this is the first hand dealt in the complex endeavour of resetting and reinvigorating Britain's housebuilding ambitions. Will the Spring see the laying of the trump cards - a new Affordable Homes Programme, a revised National Planning Policy Framework and the outcome of the New Towns Taskforce? We will see but the stakes could hardly be higher.
