The Minister for Housing and Planning (Matthew Pennycook)
On 2 July 2025 we published a five-step plan to kickstart a decade of social and affordable housing renewal and set out this plan to the House in a written ministerial statement—HCWS771.
Today I am providing a progress update on the implementation of the plan, as well as confirming next steps in respect of grant funding, regulation, rebuilding sector capacity, and the reinvigoration of council house building, so that registered providers have the clarity and certainty they need ahead of bidding opening for our new social and affordable homes programme—SAHP—next month.
The biggest boost to grant funding in a generation
In July we confirmed headline parameters for our new 10-year £39 billion SAHP. Prospectuses for London and the rest of England were published by the Greater London Authority and Homes England respectively in November 2025. Bidding for the programme will open next month.
Rebuilding the sector’s capacity to borrow and invest in new and existing homes
We remain committed to providing a stable rent policy for social and affordable housing that supports investment in new and existing homes, with the right protections for existing and future rent payers and for public spending.
The 10-year settlement of CPI + 1% announced at the spending review gives the sector the long-term certainty it needs. We also confirmed at the spending review that we would implement a convergence mechanism as part of the new long-term settlement, not least because we believe that doing so is right in principle to address the disparity between actual social rents and formula rents.
Following consultation, I am today confirming that registered providers will be able to increase weekly rents for social rent homes that are below formula by up to an additional £1 on weekly rents each year over and above CPI + 1% from 1 April 2027, and by up to an additional £2 on weekly rents each year over and above CPI + 1% from 1 April 2028, until formula rent is reached.
Convergence will only result in a tenant paying more where their rent is below formula rent—i.e. below the maximum that could be charged if their social rent home was re-let to a new tenant. We believe that this approach strikes a fair balance between the need for increased investment in new and existing homes, the interests of existing and potential social housing tenants, and the consequences for public spending and our fiscal rules.
To help providers build more social and affordable homes, we announced at the spending review that we would make available £2.5 billion of low-interest loans over four years—2026-2030. The loans will be made available to private registered providers of social housing and will be administered by the National Housing Bank (Homes England), and by the Greater London Authority in London.
Today I am announcing that 60% of the £2.5 billion—i.e. £1.5 billion—will be allocated to London, in the light of the acute challenges facing providers in the capital. The loans will be available at an interest rate of 0.1% and will have a duration of 25 years. They will be used to deliver the same social and affordable tenures and strategic priorities as funding under the SAHP.
They will be made available via a competitive bidding process, following confirmation of initial grant allocations made through the SAHP. We expect providers to submit ambitious grant bids for the SAHP when it opens next month, with the loans intended to secure additional homes over and above those delivered with SAHP grant funding alone. There will also be an opportunity to bid to use low-interest loans to acquire section 106 homes. Up to 10% of the £2.5 billion will be available to support the delivery of social and affordable homes via this route. We will confirm further details in the near future.
I am today also publishing a road map detailing how the Government intend to deal with the legacy problem of existing unsold and uncontracted section 106 units and how we will prevent the problem recurring by laying the foundations for a simple, more transparent and more resilient section 106 system. I will publish a separate written ministerial statement setting out further details about this policy package.
Establishing an effective and stable regulatory regime
Building new social and affordable homes must go hand in hand with ensuring that our 4 million existing social homes are safe, decent and warm for tenants. To support registered providers to invest in existing homes, we are implementing a modernised regulatory framework that puts tenant safety and experience at its heart but is proportionate for providers.
I am today confirming details of the new, modernised decent homes standard. This new DHS will apply to social and private rental tenures from 2035, allowing landlords time to plan carefully to implement the changes. It has been designed to reflect modern expectations of rented homes and improve health outcomes for tenants. It prioritises safety, decency and warmth, and it will act as a common standard for both private and social rented housing.
Following consultation, the new DHS will focus on condition as the primary factor when determining compliance of building components such as windows and roofs, rather than age. It will go further in ensuring that rented homes are provided with good-quality facilities such as kitchens and bathrooms, and it will introduce safety measures such as mandatory child-resistant window restrictors—this will help to prevent tragic falls and will give parents greater peace of mind. It will also establish a more proactive and preventive approach to addressing damp and mould.
Having carefully considered feedback to the consultation, we will not introduce enhanced home security regulations, a mandatory floor coverings requirement, or an obligation for landlords to meet repair standards within the public realm. We recognise that some landlords are already providing floor coverings, but many residents struggle to provide their own basic furnishings. As such, we intend to work with landlords and tenants to rapidly identify cost-effective ways in which landlords can better support tenants in need.
The new, modernised DHS necessarily balances the cost implications of improving the quality of existing rented homes with the need to increase social and affordable housing supply, given the importance of the latter to moving people, including many vulnerable children, out of unsuitable temporary accommodation. Guidance will be published in due course to support early action and compliance. A full Government consultation response and policy statement has been published today, setting out details of the new standard.
We have also published today the final standard to provide direction to the social rented sector on a new minimum energy efficiency standard and will publish a full Government response to this consultation shortly.
Following consultation, we have decided that all new and existing social rented properties must have an energy performance certificate C, using reformed EPCs, in a choice of fabric performance, smart readiness or heating system metric, by 1 April 2030. The compliance date to meet a second metric has been extended, so that all new and existing social rented properties must meet the equivalent of EPC C in a second metric by 1 April 2039. This recognises the unique role that social landlords play in both improving the energy efficiency and decency of homes and in increasing the supply of social and affordable housing, ensuring that social landlords have the confidence to invest now towards meeting our shared objectives to reduce fuel poverty, decarbonise the sector and increase supply.
This new standard will encourage building improvements that make homes warmer and energy bills cheaper, and that lead to lower emissions. We will publish further guidance to support social landlords with the implementation of the new standard in due course.
We have received extensive feedback from registered providers over many months, making it clear that confirmation of the future homes standard is key to unlocking ambitious development plans across the sector. The FHS will include high levels of fabric efficiency, low-carbon heating and solar by default. We will publish the consultation response, full specification, alongside laying a statutory instrument in the first quarter of 2026. This will set out the policy detail and transitional arrangements.
On 27 October 2025 we brought into force phase 1 of Awaab’s law, specifying fixed timescales to address damp and mould hazards and requiring all emergency hazards to be addressed within 24 hours. We are now undertaking our “test and learn” approach before extending the requirements to other housing health and safety rating system hazards. Last year we also introduced regulations requiring social landlords to carry out checks on electrical installations, and any appliances they have provided, at least every five years. This already applies to new lets and will be phased in for existing tenancies over the course of this year.
Reinvigorating council house building
Over recent years, councils have once again begun to build new affordable homes. Annual completions by councils have increased year on year for the past five years, and in 2024-25 they completed 10,480 homes—the highest number since the current reporting period began in 1991-92. We want to support councils to build upon the progress already made. We will continue to work with the sector to ensure that councils have the confidence, capacity and capability to deliver affordable homes at scale once again.
To provide councils with greater certainty and to support ambitious supply plans, I am announcing today that we will extend the “preferential” borrowing rate for council house building from the Public Works Loan Board rate for a further year until the end of March 2027. It will continue to be set at gilts + 40 basis points, and will be available for house building through the housing revenue account.
Additionally, I can confirm that the threshold for when a council must open an HRA will be increased from 200 to 1,000 homes from today. This will ensure that councils always have enough homes to make opening and operating an HRA financially sustainable. It will also provide councils without an HRA with greater flexibility to increase delivery, including through SAHP and the acquisition of resettlement homes through the local authority housing fund.
Finally, in July we launched the council house building skills and capacity programme. In its first year, CHSCP has engaged with 81 councils through the council house building support service to expand their delivery capability. As part of the expanded pathways to planning programme, CHSCP will recruit and train up to 50 graduates for placement with councils in 2026-27 to become qualified surveyors or construction project managers.
In November, CHSCP’s council house building support fund allocated £5.5 million to 29 councils to aid the development of SAHP bids. Today I am confirming that, due to strong demand, we are allocating a further £3.5 million to 15 additional councils. In total, this should enable these 44 councils to deliver up to 9,850 new homes and accelerate the delivery of a further 1,700 homes across the course of SAHP.
A renewed partnership with the sector
A decade of social and affordable housing renewal will only be delivered by Government working in close partnership with the sector. That is why in the coming weeks we will work with the National Housing Federation, the Local Government Association and other sector bodies to agree a compact. Once agreed, that compact will be overseen by a taskforce comprised of representatives from a range of sector organisations and interests. More detail about the terms of reference and membership of this group will be set out in the coming weeks.
At the heart of the compact will be ambitious social and affordable house building commitments, evidencing how the grant funding support and regulatory certainty and stability that this Government have provided has translated into ambitious delivery plans and bids into the SAHP from housing associations, councils and other registered providers. It will also be premised on strengthened joint governance and accountability mechanisms, including agreed supply, decency and other metrics that will be tracked and monitored, with oversight provided by regular reporting back to the Secretary of State.
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