For social landlords, the last few years have often felt like trying to complete a long-term business plan with half the numbers missing. Rent policy has been uncertain, building safety costs have escalated, retrofit obligations have gathered pace and the tension between investing in existing stock and delivering new homes has only intensified.
The government’s latest ministerial announcements, including Matthew Pennycook’s Social and Affordable Homes Programme (SAHP) policy statement, are therefore important because they provide a more complete framework for the years ahead.
But do these measures start to turn the government’s “decade of renewal” ambition into something the sector can deliver? The latest announcements build on the CPI+1% rent settlement, providing both certainty around planning and greater financial resources.
Planning
The reintroduction of rent convergence is one of the most consequential announcements for the sector’s long-term financial capacity, although it is being implemented more cautiously than many would have liked. From April 2027, landlords will be able to implement convergence gradually:
Sitting alongside the wider rent settlement of CPI +1% for ten years gives providers a much firmer basis for long-term modelling after years of uncertainty and belt-tightening. Rental income is the foundation of borrowing capacity, investment plans, and regulatory confidence. After years of disruption, convergence marks a return to a more coherent settlement.
Funding
Alongside the rent announcements, the government set out the final architecture for the Social and Affordable Homes Programme 2026–2036, backed by £39 billion over ten years. The core objective: maximise supply, particularly the most affordable homes. At least 60% of homes delivered under the programme should be for Social Rent, with the remainder available for other tenures such as Affordable Rent, Shared Ownership, and Intermediate Rent in London.
Importantly, the government confirmed that grant rates can flex where needed for higher-cost delivery, including council homes, supported housing, rural and community-led housing, and regeneration schemes that provide a net increase in supply. Arlingclose has noted some providers pulling back from supplying supported housing due to the cost, so the flex is welcome.
Bidding is expected to open in February 2026 through Homes England outside London, and the GLA within London, with delivery running through to 2036 and completions allowed up to 2039. This is a clear signal that the government wants a long-term pipeline, not a short-term funding cycle.
Further to that, the headline measure was probably confirmation that low interest bullet maturity loans will be delivered through the National Housing Bank and the Greater London Authority. At 0.1% margin, it is effectively government capital at cost, one of the most material borrowing interventions in decades and competition to bid for the £2.5bn on offer will be fierce. The majority (60%) will be allocated to London and 10% reserved for section 106 delivery, helping to unblock this mechanism.
While the low cost, unsecured and subordinated loans will be prompting excited planning, providers will need to ensure these loans sit within a sensible maturity and liquidity framework rather than becoming tomorrow’s cliff edge.
But local authorities not quite joining in on the loan bonanza…
The low interest loans are not available for local authorities. The government has extended preferential PWLB borrowing rates for an additional year from April 2026. This is welcome, but bluntly, it is insufficient for councils planning multi-year direct delivery programmes when the gilt yield curve is already very steep and long-term PWLB borrowing very expensive, making a 40bps discount less consequential. Housing and treasury teams cannot seriously plan in these conditions on rolling one-year commitments.
If the government wants local authorities to be serious players in the delivery of its targets, it needs to do more.
Regulation
The government has now published its response on the updated Decent Homes Standard. The new standard will apply to both the social and private rented sectors, but critically will not be enforced until 2035. Ministers have also narrowed the scope compared with earlier consultation proposals.
The long lead time reflects a simple reality: landlords cannot absorb another immediate compliance shock while also funding retrofit and safety works.
More immediately, Minimum Energy Efficiency Standards have been confirmed for the social rented sector. By 1st April 2030, all homes must reach EPC C against one of three metrics, but, crucially, landlords will be allowed to demonstrate compliance under the existing EPC regime if homes already achieve EPC C by 2030, protecting current retrofit programmes from disruption.
The government is also intervening directly in the Section 106 market. Developers will be required to list uncontracted affordable homes on a Homes England clearing platform for at least six weeks before tenure changes can be considered.
This is a clear acknowledgement that the planning contributions model is stalling, with affordable homes increasingly left unsold or delayed. Further guidance is promised this Spring, alongside efforts to improve standardisation and early engagement.
Finally, the threshold for local authorities having to establish a new Housing Revenue Account has been raised from 200 homes to 1,000. This reduces the administrative barrier for smaller councils wanting to build directly, alongside targeted funding to help councils prepare bids into SAHP.
Positive impact
Taken together, this package provides rental certainty, a ten-year settlement, ultra-cheap loan capacity, clearer standards on housing quality and retrofit, and practical interventions on stalled delivery routes. A positive impact.
Delivery will depend on whether funding, planning capacity, and provider balance sheets can withstand the competing pressures of safety, decarbonisation, and new build supply.
Registered provider treasury and planning teams will need to incorporate the new information on rent convergence, regulation and cheaper funding into modelling, understanding whether it opens up further financial capacity to help deliver an increase in housing supply.
Please get in touch with Arlingclose today at nkeeling@arlingclose.com to discuss how we can support your organisation in optimising treasury operations and mitigating risks.
05/02/2026
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