Budget 2026 and social housing: will new funding unlock delivery?

The latest Budget includes extra funding for social and affordable housing, a new VAT relief on land transactions, and more details on the Your First Home scheme. This article reviews what matters for registered providers (RPs) and the practical steps to consider.

Key announcements include:

• £1.5 billion additional Social and Affordable Homes Programme funding, intended to deliver around 10,000 homes in England;
• zero-rated VAT on land sold to relevant registered social housing providers from 1 April 2027;
• £4.7 billion for Your First Home, supporting around 70,000 first-time-buyer households;
• further support for council borrowing, rough sleeping, supported housing and brownfield delivery.

An additional £1.5 billion for social and affordable housing

The government will add £1.5 billion to the Social and Affordable Homes Programme, taking total 10-year investment above £40 billion. The funding will be allocated between 2027-28 and 2030-31, prioritising social rent and, in particular, council homes.

For RPs, the key question is access. Updated guidance should explain allocations, grant rates, tenure requirements and whether council-RP partnerships will be prioritised. RPs can identify schemes that could be accelerated, reworked or delivered with councils, but should wait for the conditions before changing business plans.

VAT relief for RP land purchases

From 1 April 2027, land sold to relevant registered social housing providers will be zero-rated for VAT. This could reduce acquisition costs and improve viability where a seller has opted to tax, although the legislation will determine the scope.

Key points include: who qualifies; freehold and long lease transactions; mixed-tenure schemes and subsidiaries; phased and conditional transactions; certification; and change-of-use clawback.

Your First Home: opportunity or competition for shared ownership? 

The £4.7 billion Your First Home scheme aims to support around 70,000 first-time-buyer households and the delivery of an estimated 20,000 additional homes in England. Under the scheme:

• buyers will be eligible for a 20% government equity loan;
• deposits can range from 2.5% to 15%;
• the equity loan will be interest-free for five years, with charges increasing gradually after that;
• household income caps will be £110,000 outside London and £140,000 in London;
• local property price caps will apply, including £650,000 in inner London and £500,000 in outer London; and
• participating developers will make a contribution on a sliding scale, with annual limits on scheme funding.

Pre-registration is expected to open by the end of December 2026, followed by full applications from February 2027 and the first loans from April 2027. Homes England will initially deliver the scheme, with responsibility expected to transfer to the National Housing Bank.

For RPs, the scheme could support reservations, cash flow and the sale of qualifying market-sale homes. However, it may also draw some buyers away from shared ownership. RPs may need to:

• compare the target market with their existing shared-ownership buyer profile;
• revisit sales forecasts and development appraisals;
• establish whether RPs and their development subsidiaries can participate;
• factor the developer contribution into scheme viability; and
• review the detailed rules on title, mortgageability, valuation, resale and redemption once published.

At the same time, shared-ownership income caps will rise to £90,000 outside London and £110,000 in London, widening the potential buyer pool. RPs should review their eligibility and marketing materials and consider how to position shared ownership alongside Your First Home. The aim will be to capture the increased demand without assuming that the two products will appeal to the same buyers.

Other announcements for RPs

• Council borrowing: a one-year extension of the preferential Public Works Loan Board rate, at 40 basis points below the standard rate, may support council acquisitions and RP delivery partnerships.
• Devolution and regeneration: £285 million of Good Growth funding for 2027–28 and a £1.5 billion borrowing facility for mayoral strategic authorities (MSAs) from April 2028 could open up regional investment and public-land opportunities.
• Supported housing: the planned licensing regime from 2027–28 will bring new standards and compliance requirements, with the interaction with local licensing and Housing Benefit still to be clarified.
• Brownfield delivery: the biodiversity net gain (BNG) exemption for residential brownfield sites of up to 1.5 hectares could improve viability, although commencement and transitional rules are awaited.
• Regulatory certainty: major changes to building regulations are ruled out for the rest of this Parliament, other than measures relating to building safety and the Grenfell Inquiry recommendations.

Will the Budget unlock delivery? 

There is plenty here for RPs to welcome. Extra grant, VAT relief and the proposed brownfield exemption could improve viability, while Your First Home may help mixed-tenure sales. That said, the package is still weighted towards council housebuilding and homeownership, with limited direct help for the ongoing cost of repairs, building safety, damp and mould, energy efficiency and regulatory compliance. The real impact will depend on the detailed rules that follow.

What should RPs watch for next? 

The focus now shifts to the detail: updated programme guidance, VAT legislation, the Your First Home rules, supported-housing licensing, the government’s 10-year plan and regulations for the brownfield exemption. These will determine the Budget’s real impact for RPs.

The housing team will continue to follow these developments closely and assess what they mean for RPs, including their development programmes, land transactions, funding arrangements and homeownership strategies.

This update reflects the Budget documents published on 28 October 2026. Further detail is expected through legislation, departmental announcements and programme guidance.