A New Chapter for UK Housing? Dissecting Reeves' £39 Billion Promise – A Deeper Dive by Elliot Leigh
- Elliot Leigh
- Jun 11
- 6 min read
The recent Spending Review unveiled by Rachel Reeves has sent ripples through the UK housing sector, offering what many hope is a new era of investment. At Elliot Leigh, we've spent over two decades navigating the complexities of the housing market, particularly through our Guaranteed Rent Scheme that has become a crucial cog in the machinery of providing stable homes for local authorities and housing associations. The £39 billion pledge for social and affordable housing over the next decade is more than just a figure; it represents a significant shift in government priorities, and its implications demand a deeper dive.
The Scale of the Crisis and the Promise of Investment
To truly appreciate the significance of Reeves' announcement, we must first confront the stark realities of the UK's housing landscape. The latest figures are sobering:
Social Housing Waiting Lists: As of early 2025, over 1.3 million households in England are languishing on council waiting lists for social housing. This is a 10% increase in just the past two years, demonstrating the escalating demand. For context, in some London boroughs, families face waiting times that can stretch for over a century for a suitable social home.
Temporary Accommodation Crisis: The number of households in temporary accommodation has reached a record high of approximately 117,400 as of March 2024. Within this alarming figure, over 164,000 children are currently homeless and living in often unstable, inadequate temporary housing – a doubling of this figure since 2010. This is not just a statistical issue; it's a humanitarian crisis unfolding on our doorsteps, costing local authorities approximately £2 billion annually.
Net Loss of Social Homes: Despite the desperate need, England recorded a net loss of 650 social rent homes in 2023-24. This means that more social homes were lost through sales (like Right to Buy) and demolitions than were built, illustrating a systemic failure to meet demand.
Current Social Rent Delivery: In 2023-24, only 9,866 new social rent homes were delivered. This is a tiny fraction of the 90,000 social rent homes per year that housing charities like Shelter and Crisis estimate are needed for the next decade to clear the existing backlog and meet ongoing demand.
Against this backdrop, the £39 billion investment over 10 years is indeed monumental. It aims to nearly double annual investment in affordable homes to £4 billion by 2029-30, a significant uplift from the average of £2.3 billion per year of the previous Affordable Homes Programme. The commitment to a 10-year programme is critical. Unlike shorter funding cycles, this provides long-term certainty, enabling strategic planning, land acquisition, and supply chain development that is essential for delivering housing at scale.
The Emphasis on Genuinely Affordable Social Rent
One of the most positive aspects of Reeves' plan is its explicit focus on social rent. This isn't just about building "affordable" homes, which can sometimes be priced at up to 80% of market rates. Social rent is genuinely affordable, with rents typically tied to local incomes.
Let's look at the numbers:
The average rent of new social housing lettings in England is around £457.30 per month (based on March 2025 data).
In stark contrast, the average private rent in England was £1,390 per month in April 2025.
This means social rents are approximately 64% more affordable than private rents on average. For London, the disparity is even greater, with social tenants potentially saving over £1,400 per month compared to private renters.
The Role of Homes England: A "Housing Bank" in the Making?
A key element of Reeves' strategy is the proposed transformation of Homes England into a "public financial institution" or "housing bank," backed by an additional £10 billion for financial investments. This is a potentially transformative move. By enabling Homes England to provide cheaper financing to housebuilders through large-scale investments and lending, the aim is to "crowd in" private investment and accelerate development.
Homes England has already been demonstrating its capacity, exceeding several housebuilding targets in 2024-25. This re-energised and potentially more financially agile Homes England could be instrumental in bridging the funding gap and de-risking projects for developers, thereby boosting the delivery of new homes.
The Roadblocks to Delivery: More Than Just Money
While the financial commitment is impressive, the road to delivering 1.5 million new homes is fraught with challenges. A recent report by the Radix Big Tent Housing Commission highlighted nine major obstacles:
Planning System Bottlenecks: This remains perhaps the biggest hurdle. Despite aspirations, the planning process is often slow, complex, and under-resourced. Only about 30% of local plans are up-to-date, leading to uncertainty and delays. Reforms are needed to streamline approvals and ensure that local planning departments have the capacity and expertise to handle increased applications.
Skilled Labour Shortages: The construction industry faces a chronic shortage of skilled workers. Brexit has exacerbated this issue, and a significant portion of the existing workforce is nearing retirement. While investment in training and apprenticeships is planned, addressing this gap will take time and sustained effort.
Infrastructure Deficit: Building homes isn't just about bricks and mortar; it's about supporting infrastructure – roads, public transport, schools, healthcare facilities, and crucially, utilities like water and sewage. A lack of coordinated infrastructure planning can cripple housing developments.
Developer Diversity: The market is dominated by a few large developers, with a declining number of small and medium-sized enterprises (SMEs). Encouraging greater diversity can foster innovation and increase delivery capacity.
Financial Constraints for Providers: While the new funding helps, housing associations and local councils have faced significant financial pressures, including capped rental incomes and rising construction costs, which have impacted their ability to deliver.
Unpredictable Costs: Rising construction costs (up to 20% since 2020) and a "storm of unviability" in certain sectors like Build-to-Rent can deter investment.
Local Council Resistance: Despite national targets, some local councils express concerns about the feasibility of meeting targets, citing local needs and capacities. Balancing national ambition with local autonomy will be crucial.
Section 106 Market Issues: A significant portion of affordable homes traditionally comes through Section 106 agreements (developer contributions). However, there's been a drop in new affordable home starts via this route, with almost 17,500 Section 106 dwellings with detailed planning permission currently uncontracted.
Building Safety and Decarbonisation: The sector is also grappling with vast expenditure on building safety remediation (post-Grenfell) and the urgent need to decarbonise existing stock (the Warm Homes Plan's £13.2 billion is key here). These essential investments divert resources from new builds.
Elliot Leigh: A Partner in Delivering Housing Solutions
At Elliot Leigh, we see these announcements as a vital opportunity to strengthen our commitment to providing stable and affordable housing. Our Guaranteed Rent Scheme has been running for over two decades, working hand-in-hand with local authorities and housing associations across London and Essex. We currently manage over 1,800 properties under our scheme, having paid out over £400 million in guaranteed rent to landlords.
How do we fit into this new landscape?
De-risking Private Sector Supply: We offer private landlords guaranteed rent for 2-5 year lease agreements (with options for longer), eliminating voids, arrears, and the day-to-day stresses of property management. This stability encourages landlords to keep their properties in the rental market, providing a consistent supply source for local authorities struggling to house those on their waiting lists.
Supporting Local Authorities: We partner with over 50 local authorities, working within agreed frameworks to provide homes for vulnerable individuals and families. Our rents are set collaboratively, balancing Local Housing Allowance (LHA) rates with market conditions, ensuring cost-effectiveness for councils.
Quality and Compliance: We handle all property management, maintenance (including free minor repairs and property refreshes between tenancies), and compliance, ensuring properties meet high standards and local regulations. This frees up crucial council resources.
Bridging the Gap: With the immense demand for social housing and the ongoing challenges of new build delivery, models like ours provide an immediate and effective solution to house those in urgent need, using existing private sector stock. Our ability to secure and manage over a thousand properties demonstrates the scale at which this partnership can operate.
The Spending Review's clear signal for increased social housing provision means that innovative partnerships between the private sector and public bodies will become even more critical. We are not just about managing properties; we are about contributing to a more stable, secure, and dignified housing future for countless individuals.
The Path Forward
The £39 billion investment is a powerful declaration of intent. It provides the financial firepower needed to turn the tide on the housing crisis. However, success will hinge on a multi-faceted approach that goes beyond just funding: a streamlined planning system, a growing skilled workforce, proactive infrastructure development, and strong collaborative partnerships between all stakeholders.
At Elliot Leigh, we are committed to playing our part, leveraging our experience and our Guaranteed Rent Scheme to support local authorities in their crucial work of housing our communities. The journey to delivering 1.5 million new homes and truly addressing the social housing crisis will be challenging, but with this significant investment and a collaborative spirit, a more hopeful and secure housing future for the UK is within reach.
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