At first glance, the spending review looked positive for housing, including as it did bold promises to address long-standing issues in affordable and social housing.
Chancellor Rachel Reeves announced a £39bn investment over the next decade to fund affordable housing, targeting those unable to afford market prices for buying or renting. Additionally, she pledged £10bn for financial investments through Homes England, the government’s non-departmental public body tasked with accelerating housing delivery.
Good: the country needs a period of renewal. I agree with Rachel Reeves when she says we need to invest in our roads, rail, and national infrastructure. We need to invest in social housing as part of an effort, as she puts it, to build a stronger, more resilient country.
But the devil is in the detail.
A closer examination of the spending review reveals the affordable housing programme (AHP) has been allocated less per year in new money for the rest of this parliament than its current annual budget. The funding is heavily backloaded, with approximately £3bn allocated annually until 2029 — a date conveniently aligned with the latest possible year for the next general election. When you check the small print, it’s clear spending over the next three years is not a million miles away from what the AHP costs already.
And beyond the investment announcements, Angela Rayner, the Secretary of State for Housing, Communities & Local Government, was forced to make savings elsewhere. Her overall budget is going down.
The cuts facing Angela Rayner’s department will hit local government hardest, threatening the delivery of new homes. The Local Government Association warns that one in four councils risk bankruptcy over the next couple of years, as rising costs for social care and services outstrip funding. Planning departments, already understaffed, face further reductions, which could delay approvals.
This will undermine the government’s ambition to build 1.5 million new homes by 2030. Councils will simply lack the resources to process applications. Developers and landlords, including those driving their business with buy-to-let funding, will face longer waits, increasing costs and uncertainty.
Kier Starmer is putting a great deal of faith in AI: speaking at London Tech Week, the Prime Minister announced the launch of “Extract” – an AI assistant for planning officers and local councils, developed by government with support from Google.
He says the technology will help councils convert decades-old, handwritten planning documents and maps into data in minutes — and will power new types of planning software to slash the 250,000 estimated hours spent by planning officers each year manually checking these documents. It is hoped this will dramatically reduce the delays that have long plagued the system.
I fear that it is unlikely to make an immediate impact. First, while AI tools like Extract promise to streamline planning, their effectiveness depends on councils having the capacity to adopt them, a challenge given the financial squeeze. Second, the roll-out is scheduled until the spring of 2026 at the earliest.
So, the spending review is likely to lead to planning delays and that will mean two things for landlords. First, at a macro level, BTL will become relatively more important given councils will inevitably struggle to build houses as planning slows.
And second, the BTL sector will not be immune from those delays. Brokers should let their clients know delays are on the cards: landlords contemplating building extensions — or thinking about converting properties into HMO’s to increase yields — should act sooner rather than later to avoid getting caught in bureaucratic planning obstructions as the system starts to get (even more) gummed up.
Now is the time to strike.
