The Autumn Budget contains several positive measures for affordable housing. The government has announced an additional £1.5bn for the Social and Affordable Homes Programme, supporting around 10,000 additional homes in England and taking overall investment in the programme to more than £40bn over ten years.
The additional funding will be prioritised towards social rent, particularly council homes. This investment will be welcome at a time when registered providers are having to commit significant funding to maintaining and improving their existing homes, placing further pressure on the financial capacity available for new development.
VAT changes could give developers greater flexibility
A zero rate of VAT for land sold to registered providers (RPs) from 1 April 2027 will be of particular practical interest to those involved in affordable housing development. Following the government’s consultation earlier this year, the change could remove the need for some affordable housing transactions to be structured around reaching “golden brick” solely for VAT purposes. This may provide greater flexibility over when land transfers to an RP and potentially enable developers to receive land payments earlier in the development process, supporting cash flow as construction continues across a wider site. Further detail will be needed on the scope and conditions of the relief and how it will interact with the existing VAT regime.
Supporting first-time buyers could benefit RPs too
Measures aimed at first-time buyers may also have implications beyond the open-market housing sector. For RPs using mixed-tenure models, private sales can generate an important source of income and help create financial capacity for further affordable housing investment. That is particularly relevant in the current funding environment, with the Regulator of Social Housing’s recent Sector Risk Profile highlighting the rising cost of capital and the need for providers to refinance debt taken out when borrowing costs were considerably lower. If the first-time buyer measures support demand and help get more open-market sales moving, there could therefore be a wider benefit for RPs’ financial capacity and, in turn, delivery of new affordable homes.
Building capacity for the longer term
Looking further ahead, the government says its forthcoming ten-year plan will address local authority capacity to build at scale, reduce the complexity and cost of development and release public land for affordable housing. Increasing council housebuilding is not only a question of development capacity, however. If councils significantly increase the number of homes they own, they will also need sufficient capacity to manage and maintain those homes and provide the services residents need over the longer term. It will be interesting to see how that is addressed alongside increased delivery, and whether the release of more public land creates further opportunities for partnership between councils, RPs, developers and investors.
Visit our built environment blog for more key information on the Autumn Budget 2026.
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