The Budget was a missed opportunity to provide the certainty the sector needs

Housebuilding in England has fallen to its lowest level in nine years. Only 208,600 homes were completed in the year to March 2025 – a 6% drop from the previous year. Even more concerning is that planning approvals have fallen to a 40-year low. Yet the government expects the private sector to drive most of the growth.

The recent Autumn Budget felt like a missed opportunity to provide the certainty the sector needs to respond at pace.

Social housing providers are ready to deliver against the government’s £39bn investment plan, yet crucial details on rent convergence, the Warm Homes Plan, the future Decent Homes Standard and energy efficiency requirements remain unresolved. These gaps in our financial plans slow us down at a time when the country needs us to accelerate.  

There were some positives in the Budget. The continued commitment to devolution, including new skills and growth funding, as well as £1.3bn for mayoral combined authorities through the National Housing Delivery Fund, shows that power is shifting closer to local communities. That is where it works best.

But this was a Budget delivered at a time when developers are warning that increasing costs, complex regulation and higher taxes are chipping away at their ability to build. The Bank of England’s overly cautious approach on interest rates increases development costs, keeps mortgage rates high and weakens buyer demand. When development costs rise and values don’t keep pace, the financial model breaks down.

This has serious consequences for affordable housing because a significant portion of our homes is delivered through Section 106 agreements. For Yorkshire Housing, these opportunities have accounted for around 40% of our new homes programme. These agreements depend on viable developments.

When private schemes stall, Section 106 contributions fall. This means fewer affordable homes, and fewer opportunities for people already struggling to find a safe and secure home.

The flatlining housing market has forced us to rethink our approach to sales. We have stepped away from selling homes as the market has become unpredictable, with slower transactions, softer demand and more cautious buyers. Continuing to rely on open market sale would have exposed us to too much risk and undermined our ability to deliver the affordable homes our communities need.

While stepping back has protected our financial stability, it has also reduced the cross-subsidy used to provide social rent and other genuinely affordable tenures. This is a difficult trade-off and highlights the wider pressures facing the sector.

Housing associations across the country are facing similar decisions. Development pipelines are thinning. Regeneration plans are being delayed. Confidence in future delivery is weakening. The sector is working hard to keep building, but the environment has become increasingly unforgiving. 

The challenge is clear, with high interest rates and persistent inflation pushing development costs beyond viable levels. Research by Zoopla shows that in almost half of England, the cost of development is now higher than the sales value of completed homes. Even where building remains viable, the homes delivered are often unaffordable for local people.

This contradiction is particularly evident in Yorkshire. Zoopla concludes that only York is currently classed as viable, with sales prices around 18% above development costs.

Yet York is also one of the least affordable places to live in our region. The places where development makes financial sense are often out of reach for the people who need them most.

“The sector is working hard to keep building, but the environment has become increasingly unforgiving”

The same pressures are visible in London, where new starts have collapsed to around 4,000 in the year to June 2025, a tiny fraction of the 81,000 homes per year target. The government is consulting on emergency measures, including temporary reductions in affordable housing targets.

It is difficult to see how lowering the supply of affordable homes in one of the world’s most expensive cities can provide a long-term solution. But it highlights the scale of the challenge. 

The government continues to emphasise that housing delivery is essential for economic growth. We know it supports supply chains, creates jobs and reduces pressure on public services. And without a strong and consistent supply of affordable homes, the wider economy cannot grow.

That is why borrowing costs matter so much. The future of housing delivery is tied directly to monetary policy. When interest rates stay high, development becomes unviable and investment stalls.

We set out this argument clearly in our recent publication, Cut to the Chase: The Bank of England must reduce interest rates. Growth between July and September was only 0.1%. Inflation has fallen to 3.6%. Despite this, the Bank of England remains overly cautious. The next interest rate decision will play a significant role in determining whether the housing market gets the kick-start it needs and whether the government is likely to achieve its housing targets. 

If the Bank of England reduced rates by just 1%, it would immediately free up an extra £180m for housing associations to service additional lending, increasing our ability to invest in new and existing homes. This is investment that would flow directly into construction, supply chains and community regeneration. 

There is a further tension created by high interest rates. Investing in existing homes is a non-negotiable priority, while building new homes has become the variable providers struggle to maintain. Both are essential, yet many housing associations can no longer afford to pursue both at the scale required. These issues were explored in more detail in my interview last year with Inside Housing’s Martin Hilditch.

Against this challenging backdrop, the June Spending Review offered some welcome measures. The commitment to additional funding for affordable housing, continued support for regeneration partnerships and recognition that long-term investment is essential for delivery were all positive steps. These measures will help regions like Yorkshire stretch funding further and maintain momentum. 

Devolution and collaborative housing partnerships also have an increasingly important role. The four housing partnerships across Yorkshire continue to show how shared expertise and joint investment can deliver benefits that individual organisations cannot achieve alone.

The government’s Social and Affordable Homes Programme and the continued evolution of Homes England toward a place-based regeneration role are further positive signals of a brighter future. The commitment for at least 60% of homes in the programme to be for social rent reflects a genuine recognition of national need. 

The government’s focus needs to shift away from the 1.5 million homes target for this parliamentary term to one that is realistic and deliverable. We should celebrate the significant number of new homes we can deliver through the 10-year Social and Affordable Homes Programme. This should be the key success measure for both the government and the housing sector and the benchmark against which we are judged.

It’s a truly exciting time to be in housing. The decisions taken in the months ahead will determine whether we turn the page, begin a real recovery and deliver the high-quality affordable homes this country desperately needs.

We are being listened to, and we are finally receiving some of the long-term certainty and funding we have been asking for. But we should be under no illusion about the pressure and expectation on us all to now play our part and deliver.

Nick Atkin, chief executive, Yorkshire Housing