Affordable Homes Programme (AHP)

What is the Affordable Homes Programme?

The Affordable Homes Programme (AHP) is administered in England (outside of Greater London) on behalf of the Government by Homes England. Registered Providers (including housing associations) are required to bid for grant funding to support the capital costs of developing affordable housing. Successful bidders enter into delivery agreements with Homes England. Within London the AHP is administered by the Greater London Authority.

The current AHP is running for five years from April 2021-26. The March 2020 Budget (PDF, para 2.19) announced £9.5 billion for an extension of the (AHP) over five years from 2021-22 – investment plans have remained largely unchanged since this announcement. £11.4 billion of new funding over the life of the AHP is being split between England (£7.4 billion) and London (£4 billion).

Spring Budget 2023 announced that Greater Manchester and the West Midlands Combined Authorities would get control over the AHP within their areas: “…for the first time outside of London, local leaders will now be able to set the strategic direction over the Affordable Housing Programme in their areas.”

How much housing will the AHP 2021-26 deliver?

AHP was expected to support the delivery of up to 180,000 new homes with completions continuing up to 2028, subject to economic conditions. The programme’s funding was initially split: 50% to fund homes at a discounted rent and 50% for affordable home ownership products.

The National Audit Office’s (NAO) 2022 report, The Affordable Homes Programme since 2015, records a lower target:

The Department’s final business case sets out a target of between 157,000 and 165,000 new homes. Of these, Homes England has a target to deliver between 122,000 and 130,000, and the GLA has a target to deliver 35,000. The Department considered 165,000 new homes to be a “stretch target”. (para 2.3)

The NAO report recorded the Department for Levelling Up, Housing and Communities (DLUHC) as not expecting “to fully deliver the intended benefits of the 2021 programme” particularly in relation to supported accommodation and affordable homes in rural areas (para 2.91).

The Public Accounts Committee (PAC) reported on the AHP since 2015 in December 2022 noting that DLUHC had downgraded its delivery forecast to 157,000 new homes. The PAC criticised the Department’s approach to risk “DLUHC does not seem to have a grasp on the considerable risks to achieving even this lower number of homes, including construction costs inflation running at 15-30% in and around London.” The PAC made a series of recommendations, including that DLUHC “should share with Parliament a revised delivery plan for the 2021 programme.”

The Government response was published in February 2023 (PDF) – there is a commitment to provide a revised delivery plan by summer 2023.

What type of housing does it fund?

The Capital Funding Guide sets out the type of housing grant funding will support. For more information on affordable housing definitions see Library paper What is affordable housing?

As noted above, the programme’s funding was initially split: 50% to fund homes at a discounted rent and 50% for affordable home ownership products. DLUHC made changes in February 2023 to give the development of social rented housing higher priority for funding:

Social Rent

Social Rent is a priority for the fund and you can now access Social Rent-specific grant rates in all parts of the country. This is subject to meeting Homes England’s value-for-money assessments.

Affordable Home Ownership

Affordable Home Ownership remains a priority. However, we recognise that partners may have a reduced appetite for market-sale risk associated with delivering home ownership tenures. We will therefore be flexible in our approach to assessing the strategic fit of proposals with routes into home ownership.

In addition, Homes England will “consider proposals that include an increased number of homes that were originally built for market sale” where this:

• is near-term delivery to help keep the market moving – for example, through acquisitions of unsold new-build homes or forward funding (near-term) future new-build delivery
• will contribute towards supported housing delivery, including through remodelling or improving existing housing stock

Comment

John Perry, policy advisor to the Chartered Institute of Housing commented on funding for the 2021-26 programme in the 2020 UK Housing Review Autumn Briefing Paper:

A new Affordable Homes Programme was announced for 2021/22-25/26, worth £11.5 billion together with £0.7 billion carried over from the current programme. Thus in total investment will rise somewhat to £2.44 billion annually, a quarter more than the current level of spending. The government claims, correctly, that in cash terms spending will be the highest for a decade. However, by the final year of the last Labour government’s programme, cash spending was one-fifth higher than this and of course in real terms higher still. (p5)

Numerous organisations have long called for a rebalancing of the AHP to support more social rented housing development and an overall increase in investment for this tenure. For more information see Library briefing Social rented housing (England): past trends and prospects.

The Housing, Communities and Local Government (HCLG) Select Committee’s inquiry into Building more social housing reported in July 2020 (PDF) received “compelling evidence that England needs at least 90,000 net additional social rent homes a year” (para 53) and called on Government “to invest so the country can build 90,000 social rent homes a year” (para 90). The Committee recommended the publication of annual net addition targets for social rent, affordable rent, intermediate rent and affordable homeownership tenures to improve transparency over the contribution of affordable housing to achieving 300,000 new homes a year (para 53).

The Government response (PDF) was published in October 2020.

Statistics on affordable housing supply

DLUHC publishes annual statistics on affordable housing delivery. The latest release covers supply in 2021/22.

A total of 59,175 new affordable homes were supplied in 2021/22.

Of these, the majority were for different forms of low-cost rent:

• Around 26,600 (45%) were for Affordable Rent. Affordable Rent can be set at up to 80% of local market rates.
• Around 7,500 (13%) were for social rent.
• Around 4,600 (8%) were for other forms of low-cost rent.

The remainder were for affordable home ownership:

• Around 19,400 (33%) were for Shared Ownership, an arrangement that allows people to part-rent and part-own a property.
• Around 1,100 (2%) were for other forms of affordable home ownership.

Homes for social rent are making up a declining proportion of overall affordable housing supply. In 2011/12, social rent made up around 65% of all new affordable housing, compared with 13% in 2021/22.

More data is available in DLUHC’s Live tables on affordable housing supply.

The Commons Library dashboard Local authority data: housing supply also lets you explore local statistics on affordable housing delivery.