The government has announced a raft of measures to fund the UK social housing sector, including £39 billion to build new homes under the Affordable Homes Programme (AHP).
The funding is more than the industry expected, reflecting the growing recognition that social housing investment will play a major role in solving the UK’s wider housing crisis.
This article explains the state of UK social housing, what new funding has been announced and why money alone may not be enough to solve the sector’s problems.
What’s the Current State of Social Housing?
The UK’s social housing sector is currently in crisis. To understand why, you first need to understand the country’s wider housing issues.
The root cause of the problem is that the housing supply has not kept pace with demand. Successive governments have repeatedly missed housebuilding targets, meaning the country has 4.3 million fewer homes than it needs.
This has pushed up property prices. In 2024, the average UK house price was £290,000; 7.7 times the median household income of £37,600. This is compared to 4.4 in 1999.
As a result, more people are privately renting their homes, which in turn has caused rent costs to outstrip inflation and wage growth.
According to the English Housing Survey, 32% of private renters struggle to afford housing costs.
Demand for social homes increases
With fewer people able to afford to buy or rent a home, demand for social and affordable housing has increased.
The problem is that in recent decades, the UK has lost more social housing properties than it has built.
According to the Radix Big Tent Housing Commission, just 9,535 new social homes were built in 2022/23, a dramatic drop from 22,661 in 2003/04. Alarmingly, in 2021, roughly 29,000 social homes were either sold to residents or demolished due to being in poor condition.
In fact, since the 1980s, around two-thirds of the country’s council homes have entered private ownership.
With more people in need of social housing but fewer properties available, demand has surged.
In 2024, a staggering 1.33 million households, representing around 3 million people, were on social housing waiting lists.
In some areas, the estimated wait time for a family-sized property to become available is 18 years, which is longer than childhood. In a few areas, wait times exceed 100 years, meaning people are unlikely to get a social home within their lifetime.
As a result, homelessness is on the rise. In December 2024, 354,000 people in England were homeless, including 161,500 children. This includes those in temporary accommodation, living with friends and family, or sleeping rough.
Steps the Government Has Taken
When it came to power in 2024, the Labour Party pledged to fix the UK’s housing crisis. It announced a ton of policies, including:
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Pledging to build 1.5 million new homes by the end of the next parliament
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Making it easier to build on brownfield and greenfield sites
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Giving more planning power to combined authorities (Examples are; the Greater Manchester Combined Authority or the Greater London Authority)
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Build more affordable housing
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Private rental reform
Social housing policies were mentioned, but were vague. More recently, however, the government announced funding that exceeded the industry’s expectations.
This included:
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£39 billion for the new Affordable Homes Programme.
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The 10-year social rent settlement has been set at the Consumer Price Index (CPI) of +1%.
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A consultation on social rent convergence, an early indication that it could be making a comeback in some form.
It also announced £950 million for the Local Authority Housing Fund, which will provide better-quality temporary accommodation for families.
Let’s look at some of those in detail.
£39 billion for the new Affordable Homes Programme
The Affordable Homes Programme is a major funding initiative designed to boost the supply of affordable housing in England.
Delivered through Homes England, the programme supports housing associations, local councils, and developers to build new homes for rent and low-cost ownership.
This funding will be used to:
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Build new social rent homes, particularly in areas with high demand and lower affordability
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Deliver affordable rent homes, where rents are capped at 80% of market levels
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Support shared ownership schemes, allowing people to buy a share of a property and pay rent on the rest
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Regenerate outdated or poor-quality housing estates
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Increase the supply of specialist and supported housing for older people and those with additional needs
The new programme runs until 2031 and is intended to create tens of thousands of new homes each year.
A 10-year social rent settlement at CPI +1%
The rent settlement sets out how much social landlords can increase rents each year, giving them financial certainty for long-term planning and investment.
A longer-term rent settlement has been set, allowing social landlords to raise rents by up to 1% above the Consumer Price Index (CPI) each year for the next decade.
This will help housing providers plan repairs, maintenance, and new council housing developments.
However, balance is critical, as raising rents could put greater financial pressure on residents.
Consultation on social rent convergence
The government has launched a consultation on reintroducing some form of social rent convergence, a policy that aims to align rents across different landlords and regions.
The original policy was introduced in 2002 and allowed landlords to gradually raise rents that were below the earnings-linked formula. However, it was scrapped in 2015.
The G15 group of London housing associations has stated that scrapping the policy has cost them a combined £2 billion in lost rental income.
While no final decisions have been made, this could signal a return to a more coordinated approach to setting social rents.
For housing associations, it could make financial planning easier, although it could also mean some complexity in calculating new rents. For residents, it would mean fairer, but not always cheaper rents.
These Measures Won’t Fix the Housing Crisis Alone: What Else Must be Done?
EVO welcomes this new funding. It shows that the government understands the critical role the social housing market has in solving the current crisis and ending the nightmare of homelessness for millions of households.
However, there are several reasons why the additional funding could take some time to work.
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Building social housing can be unaffordable, even with funding
Many local authorities’ housing stock is managed under a sale and leaseback agreement. This is where the homes are sold to an investor, to whom the council agrees a lease.
Once the lease period ends, the properties are handed back to the local authority.
This helps councils avoid taking on lots of debt. The problem is that many of these leases are pegged to the consumer price index (CPI), while local authorities' rental income is pegged to local housing allowance (LHA) rates.
While the CPI has increased by around 25% in the last 5 years, LHA rates have only increased by around 16% and have been frozen for several periods.
This has created a funding gap and means any councils already heavily in debt may not want to take advantage of the funding for fear that it could result in an even greater financial burden.
We have seen some councils take a different approach. Instead of limited time leases linked to the CPI, they sell the lease permanently and link it to the LHA rates. This ensures they can afford the property and gives the investor a longer period to make their money back.
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More funding can mean higher prices
A 2025 study on grant effectiveness warned that in competitive or supply-constrained markets, the availability of subsidies can lead to price inflation, especially if controls on procurement or land value are weak.
In other words, housebuilders and landowners may inflate costs when public funding, like the AHP, becomes available. This is often known as “grant capture.”
This means the public grant is absorbed into higher build costs or land values, rather than delivering more homes.
Without stronger oversight, some of the intended benefits of public investment in affordable housing risk being lost before a single brick is laid.
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Some housing providers have higher priorities
Many housing providers have huge repair backlogs left over from the pandemic or simply due to inefficient processes. In fact, according to one source, 5.5 million planned repairs remain unaddressed in the UK.
Repair backlogs aren’t the only issues housing providers have to deal with. 2,414 social housing blocks were identified as having dangerous cladding in the wake of the Grenfell Tower disaster. However, only 1,751 of these have been made safe.
Local authorities will be keen to deal with any cladding issues as a priority, and may also wish to deal with overdue repairs. This could mean fewer resources and budget available for building new properties.
This is something we think needs addressing. Investing in new homes is all very well, but how can we ensure they stay in good condition? How can we avoid adding to the 364,000 homes classified as being in “substantial disrepair”?
The Social Housing Quality Fund (SHQF) is one way of achieving this. The SHQF provided funding to deal with the backlog of repairs facing the social housing sector. The fund has now closed and all work has been completed.
But recent reports from Salford University and the Centre for the New Midlands show that the funding was highly effective when used.
They also show that there is still much to do to reach acceptable standards across the UK’s social housing stock.
In particular, the Centre for the New Midlands recommends:
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Sustained, long-term investment to address deep-rooted issues in housing quality, rather than relying on one-off repairs.
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Joined-up strategies that tackle problems holistically, for example, combining damp and mould prevention with retrofitting and energy efficiency improvements.
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Stronger resident engagement, including clear repair timelines, regular progress updates, and involving tenants in decision-making.
At EVO, we strongly agree with these findings. Not only do social housing providers need the funding to make large-scale repairs, but they also need new systems to carry them out efficiently.
These systems need to enable housing providers to communicate better with residents and share information about properties so maintenance contractors can identify underlying or repeated issues.
These are some of the driving principles behind our own digital repairs and maintenance platform. Read to the end to find out more about EVO and how it helps social housing providers make their repairs and maintenance operations more efficient.
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The planning system needs reform
The UK planning system is notoriously challenging. The government has already made changes to streamline decision-making, such as:
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Allowing smaller social housing developments to be approved by local government officers rather than planning committees.
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Enabling local councils to use compulsory purchase orders (CPOs) on land at its existing use value, rather than potential value.
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Allowing councils to build on brownfield sites and certain green belt sites.
The government is also taking steps to digitise the planning process. This will involve several reforms to make the planning process more transparent and efficient.
Most importantly, all applications and decisions will be submitted and tracked through a central platform. This will help speed up approvals and enable faster coordination between planners, developers, and government bodies.
We welcome these changes; however, we think the UK’s planning system needs serious reform at all levels if the UK is to meet its extensive house-building targets.
Funding Alone Isn’t Enough
The new government has shown encouraging intent with its increased funding commitments. But as this article has outlined, money alone won’t solve the social housing crisis.
⚠️ Building new properties will remain challenging if lease agreements, building costs and land values are subject to market headwinds.
⚠️ We won’t be able to build enough new properties unless reforms to the planning process go further.
⚠️ We won’t benefit from the homes built unless social housing providers approach repairs and maintenance differently.
In summary, solving the housing crisis requires change at every level, from how developers and councils structure development agreements to how local and national government officers handle planning applications.
If these challenges can be addressed, there is an opportunity to turn the tide and ensure the UK can help the millions of people facing housing uncertainty.
How EVO Helps
In this article, we’ve touched upon the importance of providing safe, secure homes for residents in the affordable housing sector.
To achieve this, social housing providers need digital tools that enable them to take a different approach to repairs and maintenance.
That’s where EVO comes in. It’s an end-to-end digital platform that housing associations can outsource all of their repairs and maintenance to.
It uses a combination of automation and modern technology to improve communication with residents and ensure repairs and maintenance tasks are carried out efficiently and to a high standard.
Here’s how the process works:
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Residents report issues via the EVO platform, using their phone or tablet.
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Jobs are automatically triaged and assigned to the most appropriate contractor based on location, trade and availability.
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Contractors receive real-time updates and attend jobs with full property and repair history.
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Residents stay informed with clear repair timelines and live status updates.
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Property data is captured during each visit, helping identify recurring issues and improving long-term asset management.
Housing providers using EVO have seen incredible results. For example, B&D Reside reduced its repair resolution time from over 28 days to just 6, and achieved a 96% first-time fix rate.
And of course, the overall result is good quality accommodation and happier residents. B&D earned a customer satisfaction rating of 4.6 out of 5 for repairs.
Discover how EVO can transform your repairs and maintenance, contact us today.
PHOTO BY EVO
