On June 11th, 2025, Chancellor Rachel Reeves delivered the Government Spending Review that housing experts are calling “transformational” for the social housing sector. With the biggest injection of funding in half a century, this announcement could reshape the entire landscape of social housing investment and delivery.
Spending Review 2025: A Record-Breaking £39bn Investment Over Ten Years
The government confirmed it will invest £39 billion in social and affordable housing through a 10-year new Affordable Homes Programme, representing the “biggest cash injection into social and affordable housing for around 50 years“.
To put this in perspective, this average of £3.9 billion per year is a significant increase on the £2.5 billion allocated annually under the 2021-26 programme, with spending almost doubling by the end of this Parliament to £4 billion in 2029/30. This is the first time in modern memory that housing investment has been locked in over a full decade.
Chancellor Rachel Reeves was clear about the government’s intentions, stating that this would be “direct government funding to support housebuilding, especially for social rent.” The Ministry of Housing, Communities and Local Government will work with local authorities in Blackpool, Preston, Sheffield, and Swindon, which already plan to bring forward bids to build homes in their communities.
The funding doesn’t stop there. The government is also confirming £4.8 billion in financial transactions from 2026-27 to 2029-30 to catalyse additional private capital investment and further boost house building. An additional £10 billion will be invested through Homes England to attract private investment and unlock hundreds of thousands of new homes.
What does this mean for social housing in the UK?
The implications of this funding injection are enormous for a sector that has been struggling with chronic underfunding and uncertainty. The numbers tell the story of just how desperately this investment is needed across the UK.
The Scale of the Housing Crisis
The demand for social housing is high. At 31 March 2024, there were 1.33 million households on local authority housing registers (commonly known as social housing wait lists), an increase of 3% compared to 31 March 2023 and the highest since 2014. In London alone, 336,366 households are on the London local authority waiting list for social housing, representing 25% of England’s national total.
From the supply side, 20,560 social homes were lost in 2023/24, primarily through Right to Buy sales and demolitions, while 19,910 new social homes were delivered, leading to a net loss of 650 homes for social rent. This means that despite all the building activity, the UK actually has fewer social homes now than it did a year ago.
Long-Term Certainty Transforms Planning
What makes this spending review particularly significant isn’t just the amount of money but also the timeframe. Social landlords will now be able to raise rents annually by 1% above the consumer price index rate of inflation for the next 10 years, doubling the five-year rent rise period announced by Reeves last year.
This rent settlement provides housing associations and local authorities with the financial predictability to plan major development programmes and secure private investment. As industry experts have noted, moving to a 10-year cycle for both rent and grant will enable existing registered providers to make long-term plans for delivery and provide confidence for those investing in social housing.
Addressing the Investment Gap
The sector has welcomed the announcement with enthusiasm typically reserved for much smaller funding increases. Housing sector leaders have described the commitment as having “the potential to stimulate house building across the tenures and should provide a platform for creative partnership working between the private and public sector”.
However, some challenges remain. Housing charity Shelter has called for the Government to commit enough investment to build 90,000 social rent homes per year for ten years to truly clear waiting lists and end homelessness, suggesting that even this record investment may not be sufficient to address the full scale of the crisis.
Ready to explore the opportunities in the social housing sector?
We specialise in identifying social housing developments that deliver strong returns while addressing Britain’s housing crisis. Our expert team handles the complex regulatory and financial landscape of the social housing sector, working with established housing providers to create secure, government-backed investment opportunities.
With the Government Spending Review creating new pathways for private investment in social housing, now is the time to position your portfolio for this transformational shift.
Contact Yield Investing today to discover how the biggest boost to social housing investment in a generation can deliver sustainable returns for your property investment portfolio while making a real difference to families across the UK.
