The appointment of Andy Burnham as prime minister has put social and council housing at the top of the political agenda. For investors, the direction of travel matters: the Government is steering towards the biggest council housebuilding programme since the post-war period, moving away from the "housing trap" of high costs and constrained supply. Last week it announced plans to build more than 70,000 social and affordable homes across England over the next decade.

The scale of ambition is stark: ONS data shows councils built fewer than 2% of new homes in England in 2024/25, and almost half of all councils own no social housing stock at all. Delivering the pledge will require rebuilding local authority capacity and delivery skills, not just funding.

Housing associations remain central for now

Housing associations, not councils, still deliver the bulk of social housing: roughly 84% of grant-funded affordable homes in 2024/25 were built by private registered providers, against fewer than 15% by councils. Any shift towards councils is expected to be a managed transition, so housing associations should remain a core route to market for investors near term.

Homes England funding: two live programmes

Homes England remains the main channel for affordable housing grant funding outside London, running two programmes in parallel.

The Social and Affordable Homes Programme (SAHP) 2026-2036 provides at least £27.3 billion, including £1.2 billion of bridge funding announced in March 2025. At least 60% of funded homes must be Social Rent. Funding runs through Continuous Market Engagement, with schemes starting on site by 31 March 2036 and completing by 31 March 2039 (priority given to 2029 completions), or through Strategic Partnerships aimed at high-volume providers. Homes England has confirmed 33 strategic partners for grant funding under this £39 billion programme, the largest such investment in a generation.

The Affordable Homes Programme (AHP) 2021-2026 provides £9.23 billion to deliver at least 100,000 homes by March 2029. Its Strategic Partnership route has closed, with new bids now routed through Continuous Market Engagement for schemes starting in 2026/27 and completing by March 2029. Eligibility windows and routes differ, so timing needs matching to each programme's deadlines.

Investment yields

According to Social Yield and Savills Research (2019 onwards), social housing offers stable, government-backed income with lower exposure to voids and arrears than typical private rental assets. Net initial yields range from around 3.5%-5.0% for general needs social housing, 3.5%-4.5% for Social Rent, and 3.5%-5.0% for Affordable Rent. Shared ownership delivers 3.5%-4.5% for Section 106 developments or 2.75%-3.5% for retained equity portfolios, while long-term leases range from roughly 2.5% to 4.75%. Specialist supported living stands apart with materially higher yields of around 7%-9%, reflecting greater operational risk.

Grant funding is the real constraint

Social housebuilding is inherently subsidy-dependent, and delivery volumes track government grant funding closely. Burnham has noted housing benefit spend is now more than seven times what is spent on building homes, and the Chancellor has reportedly considered borrowing up to £9 billion a year for infrastructure and housing. Whether grant funding increases at the October budget, and how it is split between Homes England, housing associations and mayors, will shape where new opportunities emerge.

Mayors are becoming key delivery partners

Regional mayors hold growing powers over land, regeneration, planning and brownfield funding, and Burnham has signalled further devolution of housing funding to them. Examples already under way include Greater Manchester's integrated infrastructure pipeline, a West Midlands metro extension expected to catalyse up to £3 billion of investment including 1,500 homes, and Bristol Temple Quarter, which could deliver up to 10,000 homes. Mayoral authorities with established Homes England partnerships and published pipelines are likely to offer more mature, de-risked opportunities.

Planning policy can move quickly

In August 2026, ministers dropped a proposal to remove on-site affordable housing quotas for private developers on medium-sized sites of 10 to 49 homes, after consultation found strong opposition and warnings the change could have cost 32,000 affordable homes over ten years. Quotas on these sites remain in force, which matters for viability modelling, particularly in rural areas. The reversal shows planning policy can shift quickly under sector pressure.

What this means for investors

The October budget will signal whether grant funding rises and how it is split between Homes England, housing associations and mayors. Mayoral authorities with existing partnerships and published pipelines offer more mature opportunities, while housing associations remain core delivery partners not to be overlooked. Scheme timing should be matched to SAHP and AHP deadlines, with new opportunities benchmarked against current sector yields. Exciting times ahead for this sector!