What the Government Spending Review 2025 Means for the Sector
When Chancellor Rachel Reeves unveiled the Government Spending Review 2025 on 11 June, it marked a significant turning point for a sector long under financial pressure. While the backdrop of a strained national economy and the competing demands of a newly elected government raised concerns, the housing sector emerged from the announcement with renewed optimism — and a clear mandate: to deliver.
Now that the dust has settled, we unpack what the review means for social landlords and the sector as a whole…
A Landmark Investment: Affordable Homes Programme 2025
Perhaps the most eye-catching announcement was the government’s pledge of £39bn to the Affordable Homes Programme 2025 — a massive increase on previous commitments. This funding will be channelled through councils, developers, and housing associations with the aim of delivering 1.5 million new homes over the course of this parliament.
While that target remains ambitious, it’s now underpinned by real financial firepower. Housing campaigners, including Shelter’s Mairi MacRae, hailed this as a “watershed moment” in the UK’s effort to reverse decades of underinvestment in social housing. But with the funding comes a clear expectation: delivery must be rapid, efficient, and scalable.
In short, there’s no time to waste.
Financial Stability Through the CPI+1% Rent Cap
One of the most consequential measures for housing providers is the CPI+1% rent cap, introduced as part of a new 10-year rent settlement. Social landlords will now be able to raise rents annually by the Consumer Price Index plus 1%, giving the sector long-sought financial predictability.
This move responds directly to years of lobbying by the National Housing Federation and Chartered Institute of Housing, who warned that uncertainty around rental income was stifling development and limiting progress on building safety and disrepair.
London Councils — where the housing crisis is particularly acute — had emphasised the necessity of this settlement to sustain the capital’s affordable housing infrastructure. With CPI+1% in place, the sector can finally plan long-term, invest with confidence, and take calculated risks on regeneration and development.
Focus on Homelessness: Prevention and Responsibility
A crucial component of the Spending Review was a commitment of over £1bn to tackle homelessness, including £950m earmarked for local authorities to purchase temporary accommodation. This shift away from reliance on private landlords — many of whom are leaving the market — is intended to give councils more control and help stabilise the cost of emergency housing.
This funding forms part of a broader Homelessness Prevention Fund aimed at reducing the burden on local authorities, many of which are facing financial collapse under the weight of temporary accommodation costs. There’s also a humane shift in policy with the planned repeal of a 200-year-old law criminalising rough sleeping — a move welcomed by frontline organisations.
Social housing providers will be expected to play a key role in this effort by partnering with councils and contributing to innovative solutions, particularly in high-pressure urban areas.
Stimulating Supply: Private Sector Incentives and Low-Interest Loans
Beyond direct investment in social housing, the Chancellor pledged £4.8bn to stimulate private investment in housebuilding as part of a broader £10bn package supporting innovation in construction and development. This funding will be complemented by low-interest loans for housing associations, designed to remove financial barriers to building at scale.
This dual-pronged approach — public subsidy alongside private market stimulation — signals a new level of trust and collaboration between government, housing providers, and the commercial sector. It’s also a recognition that addressing the housing crisis requires action across all tenures.
Providers should begin assessing how they might access these funds or partner with developers to maximise impact.
Planning Reform and Place-Based Investment
The Planning Bill, which passed its third reading just before the review, and a new Treasury approach to appraising infrastructure projects together represent a significant policy shift. This includes the introduction of “place-based business cases” and £20m grants for 25 trailblazer areas such as Leeds, Stockport, Stoke, and Barrow-in-Furness.
These reforms aim to create more coherent regeneration plans by combining housing, transport, and community infrastructure. For housing associations and councils in these areas, the opportunity lies in shaping — and benefiting from — these bids for local investment.
Energy and Sustainability Commitments
Energy remains a top concern for tenants, and the review reaffirmed commitments to the £13bn Warm Homes Plan, which will run until 2029-30. Expect this funding to filter through to social landlords, with a strong focus on upgrading stock to EPC C standards.
Initiatives may include heat pumps, solar panels, battery storage, and heat networks. While the upfront costs of retrofitting can be substantial, the long-term benefits in reduced bills and improved quality of life for tenants are clear.
Mixed Messages on Welfare
Despite the sweeping housing announcements, the Spending Review was less generous in areas of welfare reform. The two-child benefit cap remains untouched, and no concrete plans were laid out regarding Personal Independence Payment changes — both of which disproportionately impact social tenants.
On the plus side, free school meals will be extended to children in families receiving universal credit, and breakfast clubs will become a fixture in all primary schools, supporting parents and potentially aiding tenant employment.
Rent Convergence and MHCLG Efficiency Savings
The review also left room for further evolution in rental policy. A Rent Convergence Consultation is expected later this year, which could have significant implications for housing providers managing legacy rent disparities across stock.
However, not all news was positive. The Department for Levelling Up, Housing and Communities (DLUHC) must find 1% in efficiency savings, which may hit local services. Housing providers should consider engaging in local lobbying to protect frontline delivery that supports their residents’ well-being.
Delivering on Trust: The Sector’s Challenge
The sector now faces a once-in-a-generation opportunity to turn policy into progress. Deputy Prime Minister Angela Rayner, who brings lived experience as a former social tenant, reportedly fought hard to secure the funding earmarked for housing. The message is clear: the government has backed housing, and now it’s time for providers to deliver.
With expectations higher than ever, housing providers must harness every available tool to meet the government’s challenge. The good news? Data and digital innovation are already proving transformative.
Platforms like RentSense and RepairSense are empowering providers to reduce arrears, improve repairs quality and ensure compliance through actionable, AI-driven insights. As the demands of the Spending Review 2025 take effect, the ability to work smarter — not just harder — becomes essential.
To explore how your organisation can develop a stronger digital and data strategy, take a look at our latest resources:
- From Data to Decisions
- Becoming a Data-Driven Organisation
- Introducing Artificial Intelligence into Your Organisation
The future of social housing is being written right now. Let’s make sure we’re ready to shape it.
Mobysoft AI-powered PropertySense® applications RentSense® and RepairSense® help landlords improve their income-collection processes and the productivity, quality, and sustainability of their repairs service for the benefit of all involved.