The demand for social housing in the UK keeps growing, with more than a million households in England waiting for a home. To help tackle this housing crisis, the government is putting more money into affordable housing – social homes managed by councils and housing associations and rented out at lower rates.
But how much is actually being spent?
UK Government’s Total Housing Budget Breakdown
Most of the UK government’s spending on social housing is through the Affordable Homes Programme (AHP), the main funding route for social and affordable housebuilding.
The current programme runs from 2021 to 2026, with about £2.3 billion spent each year. The government has recently added several funding boosts: £500 million, another £350 million, and a further £500 million and a five-year social housing rent settlement was announced in the 2024 Autumn Budget, the first budget of a new government after the 2024 general election. This last £500 million is expected to help build up to 5,000 new social homes.
In total, the funding for new housing supply now adds up to over £5 billion.
There’s also a promise of £2 billion for 2026-27, after the current programme ends. However, this amount is actually less than what’s being spent each year, raising questions about whether support is truly increasing.
All eyes are now on the upcoming Spending Review on 11th June 2025, when the government is expected to announce what they’re calling a “generational boost” to social and affordable housing in England.
Housing Benefit & Support Payments
While the AHP focuses on building new affordable homes, most local government housing spending goes toward helping people pay their rent. The Department for Work and Pensions (DWP) manages these payments, which form a much larger portion of housing-related spending.
Housing benefit and the housing element of Universal Credit help millions of low-income households afford their social rent. Local Housing Allowance rates determine how much help private renters can receive.
These support payments add up to over £20 billion annually – far more than what’s spent on building new social housing. According to the UK Housing Review 2024, out of the £30.5 billion the government spent on housing in 2021/22, 88% (around £26.8 billion) was used for housing benefits, while only 12% went toward building or improving homes.
For many struggling families, these payments are essential for keeping a roof over their heads, but critics argue that more investment in building social homes would reduce the need for such extensive rent support in the long run.
Funding Programmes and Grants
Affordable Homes Programme (2021–2026)
The AHP is backed by £11.5 billion in funding, and the goal is to build up to 180,000 new homes across England by March 2029.
The social housing funding is split between two key organisations:
- Homes England is in charge of nearly £7.5 billion for areas outside London.
- The Greater London Authority (GLA) handles £4 billion for projects within the capital.
In early 2024, the government added a £2 billion “down payment” to support a future round of the programme. This followed a £300 million top-up announced the month before.
Warm Homes: Social Housing Decarbonisation Fund
The government isn’t just focused on building new homes – it’s also putting money into improving the quality of existing social housing. The Social Housing Decarbonisation Fund (SHDF) is helping to make older homes more energy efficient, especially those with an Energy Performance Certificate (EPC) rating below band C.
Here’s how funding has been rolled out so far:
- Warm Homes Wave 3 – £1.29 billion from 2025 to 2028 for energy-saving upgrades.
- Wave 2.1 – £778 million announced in March 2023, aiming to improve around 90,000 homes.
- Wave 2.2 – £75.5 million added in April 2024 to build on the earlier wave.
- Wave 1 – Around £179 million was allocated for 2022–2023, targeting up to 20,000 properties.
- Demonstrator phase – £60 million to upgrade around 2,000 homes to at least EPC band C.
This work helps reduce energy bills, cut carbon emissions, and make homes warmer and more comfortable for tenants. It also supports green jobs and helps tackle fuel poverty.
Distribution of Funds by Region and Local Authorities
The £11.5 billion Affordable Homes Programme splits its money between London and the rest of England. London gets £4 billion through the Greater London Authority (GLA), while Homes England manages the larger share of £7.5 billion for all other regions.
In 2023-24, builders completed 62,289 new affordable homes across England. London and the South East delivered the most, reflecting the housing pressures and high costs in these areas. But there’s a worrying trend – new affordable housing projects starting construction fell by 39% compared to the previous year, suggesting we might face even bigger shortages soon.
While London receives special attention due to its extreme housing challenges, the need for social housing stretches from Cornwall to Cumbria. Council housing waiting lists are growing almost everywhere, showing this isn’t just a London problem.
Policy Trends and Political Implications
Policy Shifts in 2024–2025 Budget
In the latest Budget, the government made it clear it wants to take a more active role in tackling the housing shortage. The Chancellor said the aim is to “rebuild Britain” by increasing housebuilding and delivering 1.5 million new homes.
Recent policy updates include:
- £500 million in new funding for the Affordable Homes Programme
- A 5-year rent settlement to give social housing providers more certainty
- Lower Right to Buy discounts to help keep more social homes in the system
- £2 billion earmarked for the next phase of the AHP in 2026–27
But some experts say these changes don’t go far enough. Centre for Cities points out that, even with the extra £850 million, spending hasn’t moved beyond the levels seen before this government took office.
Calls for Greater Investment
The demand is clear. Local authorities estimate they need around £10 billion a year to build 145,000 new social and affordable homes, adding billions to the economy.
Campaigners and housing experts have long argued that the government needs to go much further in funding social housing. A real step change in support would mean spending more than the £4.1 billion a year seen after the 2008 financial crisis – a level many now see as a benchmark.
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