Autumn Budget 2024 – Implications for the Social Housing Sector

Government target of 1.5m new homes

The Government has stated that it has an ambition to build 1.5m new homes over the course of this Parliament. With annual housebuilding currently averaging around 200-250k per year, the new target represents a significant increase to 300k units per year.

Increased funding for Social Housing

To achieve the new homes target, the Government has unveiled a £1 billion funding boost (25% increase) for social housing, bringing total funding to £5 billion per year. This includes an additional £500 million for the Affordable Homes Programme. This increase is a positive step, but the sector will need to ensure that the funds are used efficiently to meet the rising demand for affordable homes and improve existing stock.

Rent settlement: Security for Social Housing providers

The announcement of a five-year rent settlement for social housing providers will be welcome news within the sector. This will provide much-needed security for social housing organisations, allowing them to plan and invest in the development of new stock and the regeneration of existing stock. However, many in the sector had hoped for a longer, ten-year rent settlement, which would have provided even greater security in the face of rising construction and operational costs.

Cladding remediation

Seven years after the Grenfell Tower fire, we now have the inquiry findings, and the Government has allocated an additional £1bn to support the removal of dangerous cladding from buildings. Whilst the eligibility criteria and process are yet to be announced, this will be welcome news for property owners, developers and tenants.

Long-term housing strategy

The real potential for transformative change in the housing sector lies in the Government’s long-term strategy. A refreshed housing strategy was promised by the Government in August 2024 and expected to be delivered at the next spending review. In addition, planning reform could be the most transformational for the sector and yet has been difficult to deliver with incremental progress over decades.

One of the most anticipated changes is planning reform, which the Government has pledged to prioritise with an initial £50 million investment. However, given the political challenges surrounding planning reform, particularly at the local level, its successful implementation will depend on overcoming long-standing obstacles and gaining broad support.

Right to buy restrictions: Short-term impact, long-term stability

The Government’s new restrictions on the right-to-buy scheme include reducing the discounts available to tenants from up to £112,000 to a range of £16,000 to £38,000, effective from November 2024. While this is expected to create a short-term surge in Right to Buy applications and associated administrative burdens, the long-term impact could be positive for the sector. The reduction in Right to Buy sales and discounts will likely improve the stability of the housing stock and contribute to the Government’s broader target of building 1.5 million new homes.

Tax measures affecting the Social Housing sector

Several key tax measures introduced in the budget will also affect social housing providers:

• An increase to the rate of employer’s NIC from 1 April 2025: The rate will rise from 13.8% to 15%, with a reduction in the earnings per employee threshold at which employer’s NIC is payable. This will have a significant impact on social housing providers who are not considered public sector entities and as such will not be exempt from this increase.  All social housing providers will be assessing their business plans for the coming years as any increase in costs will lead to a decrease in investment in the current and new housing stock.   The sector will be working with their suppliers as well to understand what cost increases, they can expect as all businesses look to absorb or pass on this increase.
• Stamp duty reduction for first-time buyers: The reduction in stamp duty for first-time buyers from £425,000 to £300,000 could have an impact on social housing providers involved in building and selling homes to the open market. This is more likely to impact developers in the Southeast and London and could result in an immediate rush to complete purchases by the end of March 2025, followed by a drop-off in demand afterwards.

Looking ahead

There is much in the budget for the sector to like with an increase in funding, a promise of planning reform and an ambitious house building target front and centre in the Governments plans. This enthusiasm is tempered though by the increase in the cost base for all social housing providers through the NIC increase and national minimum wage increase. As we go into 2025, all focus will be on the delivery of the planning reform alongside the much-awaited long term strategy for the sector.

Read our full expert analysis of what was announced during the Autumn Budget on our dedicated page below.

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For more information on how the changes announced might affect your organisation, contact us and a member of the Public and social sector team will be in touch.

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