Reeves Unveils £39bn Affordable Housing Boost in Landmark Spending Review

Chancellor Rachel Reeves has today confirmed a £39bn investment in social and affordable housing over the next decade, marking the most significant government commitment to the sector in half a century.

Unveiled during her first multiyear spending review, the package will nearly double previous government spending on affordable housing and forms a central part of Labour’s pledge to get Britain building and tackle the housing crisis. The funds will be made available to councils, housing associations, and developers from 2026 to 2036.

The Chancellor also confirmed that social landlords will be allowed to raise rents by up to one percentage point above inflation during the same period, a move aimed at strengthening the financial position of housing providers and unlocking delivery of thousands of new homes.

The £39bn package follows a period of tense negotiations between the Treasury and other departments. Deputy Prime Minister Angela Rayner, who also holds the housing brief, is understood to have pushed hard for the uplift in funding. Her department is seen as one of the biggest winners of the review, securing the resources needed to make progress on Labour’s target of building 1.5 million homes by the end of this Parliament.

The housing boost comes alongside a wider £113bn increase in capital spending, funded through borrowing enabled by recent changes to fiscal rules. Other headline announcements include £15.6bn for local transport infrastructure and £14.2bn for the construction of the Sizewell C nuclear plant.

Industry bodies and campaign groups have welcomed the announcement. The National Housing Federation described it as “the most ambitious affordable homes programme in decades”, while Shelter called it a “watershed moment” for housing policy in the UK.

The funding will also help housing associations acquire thousands of affordable homes already built by developers but currently sitting empty, due to a lack of capacity or finance to take them on. A consultation will be launched to explore how to ensure more consistent social rent levels across the country.

Reeves’ spending review marks a significant political moment for the government following a challenging few weeks, including a U-turn on winter fuel payment changes and the release of figures showing unemployment at a four-year high. The housing package provides an opportunity to shift the focus to long-term investment and delivery.

With today’s announcements, the government has placed housing firmly at the heart of its economic and social agenda, signalling a long-term shift in priorities after years of underinvestment.