The recent Budget presented by chancellor Rachel Reeves has outlined several initiatives centred on addressing the nation’s housing shortage.
The government is channelling significant funds into housing through reforms to the right-to-buy scheme, enhancements to council resources, and a broader investment of £5bn to boost housing development, expand affordable homes, and support environmental sustainability in housing projects.
This strategic pivot towards housing addresses critical issues, including the preservation of social housing, support for housebuilders, and the objective to accelerate the delivery of new homes to meet ambitious targets.
In essence, these developments represent positive news for prospective homebuyers, the housebuilding industry, and councils under financial strain, as the government actively aligns fiscal policy with its commitment to expanding housing accessibility and infrastructure.
Reforming right-to-buy
One of the most notable changes in the Budget is the decision to reform the right-to-buy scheme, specifically by reducing discounts and allowing councils to retain all proceeds from housing sales. This measure addresses a long-standing issue: the strain on council housing stock caused by the right-to-buy scheme.
Previously, councils were required to pass 20 to 25 per cent of the revenue from housing sales to the Treasury, limiting their capacity to reinvest in social housing.
By allowing councils to retain full receipts from these sales, the government empowers local authorities to reinvest directly into housing stock – a crucial step to meet the needs of vulnerable populations and to protect existing social housing for future generations.
The projected savings for councils are substantial, with estimates reaching £265mn in 2025-26 and nearly £240mn by 2029-30. This fiscal relief is critical as many councils have faced significant financial strain, with some even declaring bankruptcy in recent years.
By reducing the administrative and financial burdens on councils, the government is creating a more resilient framework within which they can focus on building and maintaining housing.
The intended result is a more sustainable cycle where the sale of council houses does not mean a net reduction in social housing but instead enables local authorities to reinvest in housing solutions for those in need.
Alongside the right-to-buy reforms, the government has committed £5bn to various housing initiatives aimed at increasing the availability of affordable housing and boosting the overall housing supply.
A key component of this funding is the £3.1bn allocation to the affordable homes programme. This programme is designed to increase the number of affordable homes available, addressing a significant barrier faced by many potential homeowners who are priced out of the current market.
Housebuilding targets
The commitment of £3bn to support small housebuilders adds further momentum, providing smaller firms with the resources to engage in housing projects and contribute to meeting the government’s housing targets.
For the housebuilding industry, these measures signal a period of increased opportunity. By supporting small builders, the government is diversifying the housing market, allowing smaller companies to operate alongside major developers.
