How the funding fits into the housing program
The government also plans to extend preferential borrowing rates to help more councils build homes. A Treasury spokesman described the Budget measures as part of the Prime Minister's commitment to restore public housing stock, saying years of insufficient construction had denied families secure, affordable homes. The investment and borrowing support would help replace homes that had been sold, the spokesman said.
The Social and Affordable Homes Programme, announced in the June 2025 Spending Review, began as a £39 billion capital grant program covering 2026-27 through 2035-36. Its ambition is to support around 300,000 social and affordable homes, including at least 60%, or around 180,000, for social rent.
The first allocations were announced in August 2026: 33 providers in England outside London received awards totaling £9.58 billion. Nearly two-thirds of the homes they build are to be for social rent. Cambridge City Council, Eastleigh Borough Council and Newcastle City Council also became the first councils to receive Strategic Partnership status with Homes England.
London is due to receive 30% of the program's funding in its early years and up to £11.7 billion over its full lifetime. The Greater London Authority intends to offer at least £6 billion in allocations to providers of social and affordable housing in the capital.
Borrowing terms and support for councils
An existing extension keeps the preferential Public Works Loan Board rate available for council housebuilding through the end of March 2027, an additional year. The rate is gilts plus 40 basis points and applies to construction financed through a council's Housing Revenue Account.
Separate from the grants, the government is making £2.5 billion in low-interest loans available over the four years from 2026 to 2030 to support social and affordable housing. These loans have a 0.1% interest rate and a 25-year term, with a single repayment at the end. The National Housing Bank (Homes England) administers them outside London; the Greater London Authority handles them in the capital, which has been allocated £1.5 billion.
Councils can now keep all proceeds from Right to Buy sales. Other changes include a 10-year social housing rent settlement permitting annual increases of CPI plus 1%, and an increase from 200 to 1,000 homes in the threshold requiring a council to open a Housing Revenue Account.
The government is also renaming its council housebuilding skills and capacity program "Capacity to Build" and providing an additional £46 million over three years for the expertise and support councils need to pursue their construction plans. Separately, the Council Housebuilding Support Fund awarded £5.5 million to 29 councils, followed by £3.5 million to another 15, to help develop applications to the Social and Affordable Homes Programme.
Waiting lists and housing costs
England's social housing waiting lists contain more than 1.3 million households. Just 12,250 social rent homes were delivered in 2024-25, while the number of children in temporary accommodation reached a record 177,500, a 5% increase over a year.
A separate measure in the government's January 2026 progress update put council housing completions in England at 10,480 for 2024-25. That was the highest total since the reporting series began in 1991-92.
More than two million council homes have been sold under Right to Buy since the 1980s. The Mirror reports that successive governments' failure to replace them has left millions struggling to find a first home.
Pressure also extends to private renters and buyers. Figures released this week showed average monthly private rents rising 3.8% in the 12 months to September. House prices increased 0.9% to £273,000, following a 1.2% rise the previous year. Earlier this year, the head of Barratt Redrow, Britain's largest housebuilder, described conditions for first-time buyers as the toughest since the 2008 financial crisis.
Right to Buy and wider housing plans
Prime Minister Andy Burnham has pledged the largest council and social housebuilding program of the postwar period. His plans include protecting newly built homes from Right to Buy sales for 35 years.
At last month's Labour conference, Housing Secretary Angela Rayner said the government would cap "outrageous" leaseholder fees and regulate managing agents behaving like "cowboys, crooks and con artists". Plans announced as part of the wider housing strategy would also allow councils to take back homes left empty for six months.
Shelter urges action on council housing debt
Shelter's acting chief executive, Mairi MacRae, welcomed the additional funding but said it was not enough to fulfill the government's promised council housebuilding revolution. As winter approaches, she said, record numbers of children remain homeless in poor temporary accommodation, while many other families face soaring housing costs.
MacRae said social rent homes, with rents linked to local incomes, were the only genuinely affordable choice for many families, yet their supply had fallen sharply over recent decades.
She called on the Prime Minister to use the autumn Budget to remove unsustainable housing debt from council balance sheets and "truly turbocharge" the delivery of social rent homes.
