Welcome investment boost to social homes development but decarbonisation funding falls short

The Welsh Government has published its detailed draft budget for 2026-27 which has provided the departmental budget expenditure lines for 2026/27. Resource funding for housing and local government has seen an inflationary increase of 2.21 per cent and capital funding for housing and local government has seen an inflationary increase of two per cent. 

The total funding for housing and local government in 2026/27 will be £6.98 billion to housing and local government made up of £5.69 billion in resource funding, £1.21 billion in general capital funding and £8.2 million in financial transaction capital funding. 

The detailed draft budget has set out the following levels of investment which unless specified just include an inflationary increase on the funding levels in 2025-26:

• £445.9 million for social housing grant which includes £26.8 million in additional financial transactions capital to support loans to registered social landlords for home building
• £110 million for Dowry gap funding and major repairs allowance
• £96.9 million for decarbonisation
• £2.3 million to meet initial costs for the Homelessness and Social Housing Allocations (Wales) Bill
• £38.25 million capital funding and £3.7 million revenue funding for the warm homes programme
• £1.3 million for Academi Wales
• £223.8 million for homelessness support and prevention.

Despite the initial draft budget outlining that most departmental budgets will only receive an inflationary uplift we welcome the decision by the finance secretary to provide additional monies to help develop the homes we need at pace and scale. We also welcome the initial funding for the initial costs of the Homelessness and Social Housing Allocations (Wales) Bill and the indication in the budget report that the fire service in Wales will receive additional monies to support their enhanced inspection regime. Monies that are vital to successful implementation of the two new proposed pieces of legislation. 

Despite this we are disappointed that decarbonising our existing homes has only seen an inflationary uplift. As outlined in our manifesto ‘A plan for housing in Wales’ and based on research by The New Economics Foundation the level of investment needs to far higher than the £96 million currently allocated. Our social housing providers are committed to developing the homes we need to end the housing crisis and improving our existing homes as we work towards a net zero Wales. They will need sufficient levels of funding for both these policy aims as they work towards providing safe, suitable, sustainable and affordable homes for this and future generations. 

Matt Dicks, national director of CIH Cymru commented on the budget: “Wales is in the midst of an ongoing structural and systemic housing emergency. Currently 90,000 households representing 170,000 individuals including 34,000 children are waiting for a social home. In 2024/25 one in every hundred households became homeless and in August 2025 there were 11,029 individuals living in temporary accommodation and 168 people were sleeping on our streets. 

“It is clear that we need more social and affordable homes to help meet the rising levels of housing need in Wales and as such we welcome the uplift in social housing grant to enable registered social landlords to develop the homes we need. But we also need to ensure our existing homes are both affordable and sustainable. It is therefore disappointing that the decarbonisation funding has only seen a inflationary rise in the budget. Both these policy areas need sufficient funding if we are to meet their overall aims of providing safe, sustainable and affordable homes in Wales.  

“We need to take a whole system strategic approach to housing in Wales. To do this housing should be a foundation mission of government. That is why in our Manifesto ‘A plan for housing in Wales’ CIH Cymru calls for the next government to enshrine the right of adequate housing into Welsh legislation. We must be ambitious and deliver the legislation needed, using it as the driver and mechanism through which we can ensure everyone in Wales can access a safe, suitable, sustainable and affordable home ensuring housing is a foundation mission of government now and in the future.”