Ministerial statement completes picture for social landlords as government updates plan to deliver decade of renewal for social and affordable housing 

This afternoon (Wednesday 28 January), the minister of state for housing and planning, Matthew Pennycook, unveiled the details of the new social and affordable housing package. 

Below, we outline everything that has been announced or confirmed, along with our reactions. 

Rent convergence 

Social housing landlords will be able to implement rent convergence in a staged approach from next year: 

• Convergence can begin from April 2027 with an additional £1 per week 
• From April 2028, this will step up to £2 per week until formula rent is reached. 

This follows a consultation last summer on how to implement convergence as part of the announced rent settlement of CPI+1 per cent for 10 years at the 2025 Spending Review. 

CIH called for £2 per week plus additional funding for existing homes, to ensure that the additional financial capacity created could be used to build new homes as well as maintain existing homes to a high standard for tenants. This followed joint-sector Savills analysis, published by CIH, on the potential impact of each scenario in the rent convergence consultation. 

Gavin Smart said: “We welcome the government’s announcement to re-introduce rent convergence for social housing, which strikes a balance between the needs of landlords to invest in existing homes and affordability for tenants. This, coupled with the social rent settlement announced last year, will provide the sector with the certainty it needs for long-term financial and business planning. 

“We will be analysing what those figures mean for the sector's capacity to deliver on the government's priorities in due course.” 

Further financial announcements 

The minister made further announcements to boost the financial capacity of the sector. For housing associations, the low-interest loans introduced through the National Housing Bank and the Greater London Authority have been confirmed at 0.1 per cent interest rate. Bids will open after the initial grant round. Loans will bullet loans — that is interest only during the term of the loan with the entire principal amount repaid in one lump sum at maturity. 

Sixty per cent of the £2.5bn (£1.5bn) will be allocated to London, in light of the acute challenges facing providers in the capital, and 10 per cent of the loans will be available for section 106 projects. 

For local authorities, the government has confirmed that the Public Works Loan Board preferential borrowing rates will be extended for an additional year from April 2026, to provide greater certainty, and will continue to keep this under review in future. 

CIH will be updating its analysis of the financial capacity of the sector with the details announced today and will publish the findings in due course. 

Decent Homes Standard 

Today, the government also published its response to the recent consultation on a new Decent Homes Standard — which it shared earlier this morning, alongside other announcements — ending a process that started five years ago when the review was first initiated. 

The response confirms that the government will go ahead with implementing a new standard to be met by both social and private rental tenures from 2035. Significant changes announced today that differ from the consultation paper are that floor coverings will not be mandatory, and the new standard will not cover home security or public domain repairs. 

We will provide more detail and insight in a member briefing shortly. 

Minimum Energy Efficiency Standard (MEES) for the social rented sector

By 1 April 2030, social housing providers will be required to ensure all homes reach an EPC C rating on one of the Fabric, Smart Readiness, or Heating System metrics (on the reformed EPC regime), or have a valid exemption registered. Providers will have the flexibility to choose which of the three metrics they will meet, and there will be a £10,000 cost cap. They will then have to meet a second metric by 2039.

We are also pleased to report that the government has listened to the sector and changed the transition regime, so landlords will be able to demonstrate compliance with MEES on the current EPC regime if they have an EER C by 1 April 2030. This will last until that EPC expires and will enable existing retrofit plans to continue to 2030 if appropriate.

Dr Matthew Scott, policy manager (net zero and sustainability), said: “We welcome the broad confirmation of how the MEES policy will work in the social rented sector, which takes on board many recommendations made by CIH and our members. 

“The government’s decision will ensure investment continues to make homes warmer and safer between now and 2030, while protecting capacity for building vitally needed new social homes.” 

We are awaiting the detailed guidance and will update members when that is published.

Section 106 planning contributions 

To help deal with the issue of un-purchased homes built for affordable housing as part of planning contributions, the government has announced a time-limited emergency package for social landlords and developers. 

Developers will have to put any uncontracted section 106 homes on a Homes England clearing site for at least six weeks for landlords to review and purchase if appropriate. If they are then still unsold, the local planning authority will be expected to adhere to a new emergency, time-limited approach to tenure change.

The government will issue new guidance to improve early engagement and collaboration between developers and RPs, provide greater clarity on the standards homes must meet and encourage standardisation across the market. 

It has promised to set out further detail in due course, with the intention of the full reset coming into force this spring. 

Supporting council housebuilding 

To further support new council housebuilding, the government has raised the threshold for when a new Housing Revenue Account needs to be established from 200 homes to 1,000. This, alongside an additional £3.5m for 15 councils to help them prepare bids to the new SAHP from February, will help councils meet their own ambitions on direct housebuilding. 

A renewed partnership with the sector 

Now that most of the anticipated decisions have been made, the government is turning its focus to delivery. It has announced plans to develop a compact with the sector, which will be overseen by a taskforce comprised of representatives from a range of sector organisations and interests.

More detail about the terms of reference and membership of this group will be set out in the coming weeks.