The Government's new Social and Affordable Homes Programme will provide £39bn over the next 10 years, with at least 60% of homes expected to be delivered for Social Rent. A programme of this length should give providers greater confidence to build long-term development pipelines, retain experienced development teams and enter into strategic partnerships. At the same time, it has been closely linked to the Government's commitment to deliver 1.5 million homes during this Parliament, meaning questions are already moving from funding to implementation. The focus now shifts to delivery.
Homes England and the Government have now confirmed the first 33 strategic partners who will receive grant funding through the programme. While significant, this represents only part of the allocation from the £39bn programme, with approximately £9.6bn allocated through this initial strategic partner round (to build around 73,600 homes) and further funding still to be distributed through other routes, including Continuous Market Engagement.
For those organisations receiving allocations, a significant element of the uncertainty around funding has been removed. The focus now shifts to delivery. Over the coming months, providers will be looking to convert funding allocations into land acquisitions, development starts and completed homes, while others continue to engage through the Continuous Market Engagement route. The recent announcement represents an important milestone, but it also brings into sharper focus the practical question of whether the sector has the capacity to deliver at the scale envisaged by Government.
There is also a wider planning backdrop intended to support housing delivery. The Government's revised National Planning Policy Framework (NPPF) places greater emphasis on housing growth, strategic planning and delivery. The practical impact will take time to emerge, but the reforms are intended to help bring more housing forward.
The ambition is clearly there. The question is whether registered providers have the capacity to respond at the scale now being asked of them.
Existing homes must come first
The financial context remains challenging. The Regulator of Social Housing's 2025 Global Accounts recorded a 13% increase in repairs and maintenance expenditure to £10bn, including £3.9bn of capitalised works. Providers are forecast to spend an average of £10.9bn a year on existing homes over the next five years. Sector-wide EBITDA-MRI interest cover fell to 87% in 2024/25, meaning that, in aggregate, providers' earnings after accounting for expenditure on maintaining existing homes were insufficient to cover interest costs. The decline reflected both a significant increase in repairs and maintenance expenditure and higher debt servicing costs arising from increased interest rates and borrowing.
Of course, not every provider is in the same position. Some retain significant borrowing capacity, while others are reducing development, recycling assets or concentrating expenditure on existing homes. But the wider picture matters. Put simply, resources directed towards remediation, stock condition, energy efficiency and compliance are resources that cannot simultaneously be used to fund new homes.
The pressure is not just financial. From 30 November 2026, Phase 2 of Awaab's Law will extend statutory response timescales to a much wider range of significant hazards, including fire and explosion risks, electrical hazards, excess heat and cold, falls, structural collapse and domestic hygiene hazards. Compliance requires far more than a repairs budget. It depends on accurate data, effective triage systems, surveyors, contractors, resident communication and, where necessary, access to alternative accommodation.
There are also practical delivery constraints. Building Safety Act gateway approvals for higher-risk buildings, planning delays, utility connection timeframes and wider resource pressures across local authorities and regulatory bodies can all affect delivery programmes. Even where funding is available and schemes remain viable, delays in obtaining approvals or progressing infrastructure can slow the journey from policy ambition to completed homes.
Delivery depends on the wider market
Affordable housing is not delivered in isolation. It is often delivered alongside market housing, meaning conditions in the wider residential market directly affect affordable housing output.
Recent market evidence remains subdued. Savills research puts total housing delivery in England at just over 200,000 homes completed in the year to Q2 2026, with housing starts 32% below the pre-Covid Q2 average. House price growth has slowed, with annual UK house price inflation running at around 2% by mid-2026. Against a backdrop of higher borrowing costs, rising build costs and softer sales conditions, viability remains a challenge for many residential developments.
That feeds directly into Section 106 delivery. If a developer cannot secure a registered provider purchaser for the affordable homes, progress on the wider scheme can slow or even stall. Early engagement with the Section 106 Affordable Housing Clearing Service was encouraging, but the evidence published to date suggests it has not yet operated at a scale capable of resolving the broader backlog of uncontracted homes. Data emerging from Homes England points to a more complex picture than simply a lack of visibility between buyers and sellers, with pricing, location, tenure mix and product specification all affecting demand. The Government's roadmap reaches a similar conclusion, recognising that a more resilient Section 106 market will require greater pricing transparency, clearer specification standards and earlier engagement between registered providers and developers, rather than relying solely on mechanisms to match available homes with potential purchasers.
The service is therefore best viewed as an enabling tool rather than a standalone solution. Savills reports that demand for Section 106 acquisitions has improved as some major registered providers have returned to the market, but the pool of active buyers remains relatively limited. Registered providers are increasingly selective, weighing factors such as location, energy performance, building safety requirements, management efficiencies and whether schemes align with their strategic priorities. Developers, meanwhile, continue to face viability pressures arising from rising costs, planning delays and changing market conditions. The result is a market in which both parties are being more selective, making transactions possible, but often more complex and harder to conclude than in previous years.
RP land-led development tells a slightly different story. Savills' July 2026 research suggests activity has remained relatively strong, supported by grant funding, greater certainty around future social and affordable rent growth. For many providers, developing directly offers greater control over build quality, energy performance and long-term management costs. However, debt costs, planning delays, viability pressures and competing demands on balance sheets mean that most providers are likely to remain selective about the opportunities they pursue.
The announcement of the first Strategic Partners may also influence market behaviour. Providers with confirmed allocations may be better placed to pursue land-led development opportunities and plan future investment with greater certainty. The awards provide a clearer picture of where a significant proportion of early programme funding will be deployed. Whether that translates into a meaningful increase in housing delivery will depend on how quickly funding can be deployed and schemes progressed through planning, infrastructure and construction stages.
Turning ambition into delivery
Grant remains essential, but it needs to reflect the real cost and risk of delivery. There is also an important role for institutional capital, for-profit providers, local authorities and partnership structures that separate ownership, funding, development and management responsibilities.
Targeted interventions may help. NatWest's £250m Section 106 Loan Fund matches £250m of low-cost funding announced by Homes England as part of its wider £2.5bn low-cost loan programme, creating a combined £500m that could support the acquisition of around 2,500 Section 106 homes. We are also seeing more schemes rely on a blend of funding sources rather than a single solution, with grant, low-cost lending, institutional investment and private capital increasingly being used alongside one another. That can add complexity, but it reflects the reality that unlocking delivery often requires different forms of capital to work together.
There is no shortage of ambition. The Government has committed significant funding through the Social and Affordable Homes Programme and planning reforms are intended to support housing delivery. The foundations for increased delivery are increasingly visible.
The challenge is that delivering affordable housing at scale requires more than funding and policy support. Registered providers continue to invest heavily in existing homes, regulatory expectations continue to evolve, and development programmes remain affected by a range of practical constraints, from viability pressures to planning, infrastructure and building safety processes. Those challenges are playing out against a backdrop of subdued housing delivery, higher borrowing costs and continued uncertainty across parts of the residential market.
Perhaps that is where the sector finds itself today. The debate is no longer simply about whether there is political support for affordable housing, or even whether more funding is needed. The question is whether the sector can convert that investment into homes on the ground at the pace and scale the Government is seeking, while continuing to navigate a challenging economic and housing market environment. The sector clearly has ambition. Whether it can deliver at the scale now expected of it remains the defining question.
For more information, please get in touch with a member of our built environment team.
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