6 things we learned about the government’s plans for a ‘decade of renewal’

New social homes exempt from Right to Buy for 35 years

Following a consultation, the government is introducing some long-awaited changes to the scheme, first introduced by Margaret Thatcher in the 1980s.

These include increasing the length of time someone needs to have been a public-sector tenant to qualify for the Right to Buy from three to 10 years and reforming discounts so they start at 5% of the property value, rising by 1% for every extra year an individual is a secure tenant, up to the maximum of 15% of the property value or the cash discount cap (whichever is lower).

Plus, exempting newly built social homes from the Right to Buy for 35 years. Mr Pennycook said this move will “ensure councils are not losing homes before they have recovered the costs of building them”.

He explained that the government will legislate when parliamentary time “allows to bring these reforms into force”.

In the interim, the government will reform the receipts regime and extend existing flexibilities on spending Right to Buy receipts indefinitely.

“Councils will also continue to be able to retain the share of the receipts that was previously returned to HM Treasury. In addition, from 2026-27 we will permit councils to combine receipts with grant funding for affordable housing to accelerate council delivery of new homes,” Mr Pennycook said.

Up to 30% of funding under the new Social and Affordable Homes Programme funding will go to London

On Tuesday, it was confirmed that up to 30% of funding from the new £39bn SAHP –  £11.7bn over the 10 years – will be used to support housing delivery from the Greater London Authority in the capital.

According to the policy document on the plan, at least 70% of the funding will be available for the rest of England via Homes England, depending on bids.

Outside of London the government reiterated its commitment to devolution in the plans and will allow established mayoral strategic authorities to set strategic direction for the programme in their area.

Low-interest loans and combined lending

As part of the second step to rebuild the sector’s capacity to borrow and invest in new and existing homes, the government announced £2.5bn of low-interest loans over the Spending Review period to support the delivery of new social and affordable housing.

According to the policy paper: “We know that providers need to borrow more to build more homes, but there are constraints on their capacity to take on more borrowing.”

The loans are intended to complement commercial lending. Providers will be able to combine these loans with grant from the SAHP, guaranteed lending from the Affordable Homes Guarantee Scheme and Section 106 contributions.

“We will engage providers on designing and deploying these loans over the summer,” the document said.

New Decent Homes Standard will not come in until at least 2035 

An interim impact assessment on the DHS revealed that changes will not come in until at least 2035. It put the average cost of remediating each property to the new standard at £5,079 for social landlords, and £6,993 in the private rented sector (PRS).

The government has accepted that these costs could be passed on to tenants in the PRS depending on market conditions and housing affordability. Although it believes the new burden to be proportionate and any above-market rent increases will be able to be challenged in a first-tier tribunal under the Renters’ Rights Bill.

The estimated cost will result in a reduction of 4,000 to 8,000 homes provided by social landlords over the appraisal period, implying a loss of land value uplifts of -£323.4m.

The government has acknowledged that some private landlords may leave the sector as a result, but it said the ones facing the highest costs are likely to “be the ones providing the poorest service to their tenants”. This leaves potential for them to be replaced by more professional landlords.

There are expected to be significant non-monetised benefits to tenants and the wider society, such as improved health and well-being, a reduction in energy usage from better maintained homes and the associated reduction in carbon emissions.

Rent convergence will generate billions for the sector, but taxpayers and residents left out of pocket

An impact assessment on rent convergence set out three options: do nothing, £1, or £2 convergence.

For the £2-a-week convergence (on top of the rent settlement of Consumer Price Index plus 1%), the estimated additional cost to social housing tenants who pay their rent without assistance from housing support (approximately one third), or are subject to the benefit cap or removal of the spare room subsidy, will pay around £2bn more in rent over the period 2026-36. 

However, convergence would only affect households currently paying less than formula rent (below the maximum that could be charged if their home was re-let to a new tenant). 

The document stated: “Convergence would, over time, achieve greater fairness between the rents paid by tenants of social rent homes, with rents remaining much more affordable than the private rented sector.”

The cost of this option to taxpayers is £4bn due to higher social security spending over the same period. 

However, the households on benefits in the PRS that get the chance to move into the social rented sector will generate savings for taxpayers.

Registered providers of social housing will receive £6bn more in rental income over the period 2026-36.

For working households not in receipt of housing support, rents are forecast to peak at 17.1% of income nationally and 20.4% in London. For pensioners, this rises to 26.6% and 36.9% respectively.

For the £1-a-week convergence, households would pay approximately £1.8bn over the period 2026-36. This option would also be a cost to taxpayers of £3.6bn.

For working households not in receipt of housing support, this option forecast a peak of 17.1% of income nationally and 20.4% in London. For pensioners, this rises to 26.5% and 36.7% respectively.

For social landlords, this will result in £5.3bn.

Housing Revenue Accounts will be reviewed

The document highlighted how the discounted Public Works Loan Board (PWLB) rate for HRA borrowing is due to end in March 2026.

To address this, the government is keeping all PWLB rates under review and will confirm its approach to a discounted HRA rate in the autumn.

For councils without a HRA, the threshold of homes they hold so they can open an account will be reviewed with more information expected shortly.

Changes are also being considered to the rules governing HRAs to facilitate council housebuilding.

The document stated: “While councils should focus on building through HRAs, we also encourage them to use other methods such as local housing companies and partnerships with housing associations or private developers.”