On 11 June 2025, Chancellor Rachel Reeves unveiled a landmark 2025 Spending Review, allocating £39 billion to social and affordable housing—the largest investment in five decades. Labelled a “renewal of Britain” by many, the package was heralded as transformative. Yet, as housing professionals and private landlords dig deeper, the tension between ambition and delivery becomes strikingly clear.

1. What’s in the £39 Billion Deal?

The headline funding, channelled through Homes England, will support housing associations, councils, and private developers—targeting 1.5 million new homes by 2030. Annual spending on social housing is projected to rise from around £2.3 billion to nearly £4 billion per year by 2029/30.

Goal: Create the largest sustained injection of capital into social housing since the 1970s—addressing shortages, raising affordability, and building long-term supply.

2. Beyond Numbers: Policy Commitments

Asylum Hotels to Close

The Spending Review announced the phasing out of asylum seeker hotels, reallocating savings into housing support. Once individuals gain “right to remain,” they will enter the private rented sector (PRS). But with PRS supply already under strain, this adds pressure without supporting infrastructure.

Repealing the Vagrancy Act

After 200 years, the Vagrancy Act is being repealed—a symbolic move towards eliminating outdated criminalisation of homelessness. However, this humane shift places added urgency on the need for genuinely affordable homes.

3. Social Housing: Progress with Caveats

Even with the historic infusion:

• Persistent quality issues plague many providers, from damp to safety failings.
• The Local Housing Allowance (LHA) freeze keeps low-income renters locked out.
• Awaab’s Law, demanding prompt remediation of damp and mould, comes into force in October 2025, raising compliance costs.
• Registered Social Housing provider insolvencies—notably Home REIT and Social Housing REIT—have shaken sector confidence.
• Local councils are expected to raise council tax to cover budget shortfalls.

Meanwhile, housing associations report declining interest cover—from 151% to 88% since 2021—threatening their capacity to borrow. The National Housing Federation warns that without further support, delivery targets will be missed.

 

4. Private Rented Sector vs. Policy Reality

The government expects the PRS to absorb more demand—but landlords are pulling out, citing:

• No tax reliefs against portfolio disposal.
• Increased costs from green standards and AML compliance.
• The upcoming Renters’ Rights Act, with risk of rent caps and longer tenancies.

An analysis by Goodlord warns that even the £2 billion down payment announced earlier was “nowhere near enough” to meet housing needs. With mortgage interest still high, many landlords feel financially squeezed.

5. Infrastructure Projects: PRS Hotspots Emerge

Despite pressures, opportunity lies in major infrastructure zones:

• Oxford–Cambridge Arc rail link: expected to surge rental demand.
• Lower Thames Crossing (Essex–Kent): boosts commuter connections.
• Sizewell C nuclear station: skilled labour influx.
• Road, school, and hospital builds across regions.

 

These projects promise concentrated demand, making them ideal investment targets—provided landlords address supply, quality, and PRS constraints.

6. Fiscal Tensions: Balancing Borrowing and Services

The Review is enabled by altered fiscal rules, allowing borrowing for capital outlays and a £113 billion funding uplift. But analysts from the IFS warn of difficult trade-offs—balancing health, defence, and housing growth alongside spending limits.

While Reeves assures there’ll be no day-to-day borrowing, critics argue tax rises could still arrive in the autumn. Others stress that Home Office and council budgets are already under pressure.

7. Independent Analysis: What the Experts Say

• The Institute for Fiscal Studies warns funding bumps for NHS and defence may force tough choices elsewhere.
• The National Housing Federation calls for energy retrofit grants and supported housing funding.
• Leeds Building Society commends ambition but warns of “momentum stall” without departmental clarity.

8. What PRS Landlords and Agents Must Do Now

✅ Audit Portfolios Proactively

• Review tenancy renewal timelines—especially Section 21 before its repeal.
• Agree rent increases if significantly below market rates.

✅ Map Infrastructure Opportunity Zones

• Identify properties near Oxford–Cambridge, Sizewell C, and Thames Crossing.

✅ Lobby for PRS Incentives

• Engage with your MP to push for rollover relief, energy-upgrade grants, and council tax offsets.

✅ Build Compliance-Well

• Prepare for similar obligations to social housing, such as Awaab’s Law.
  We will keep you informed when the situation becomes clearer

9. Conclusion: A Turning Point with No Silver Bullet

The 2025 Spending Review marks a turning point—historic investment in social housing, repeal of outdated laws, and renewed infrastructure promise. But success requires more than announcements:

• Policy and funding must align.
• Private landlords must be incentivised.
• The PRS must remain resilient.

 

10. How ihowz.uk Helps You Navigate Change

At ihowz.uk, we help landlords and letting agents stay informed and proactive:

• Strategic training modules on Section 21, Awaab’s Law, and energy compliance.
• Localised market insights aligned with infrastructure developments.
• Timely policy briefings to support advocacy and sector influence.
• Access to legal clinics for tribunals, deposit disputes, and evictions.

Our mission: Keep your lettings business resilient, compliant, and future-proof.

🏁 Final Take

• £39 billion is a bold commitment, but delivery remains uncertain.
• PRS supply is falling. Without incentives, landlords will continue to exit.
• Infrastructure projects offer investment opportunity for those ready to act.
• ihowz.uk offers the tools and insights PRS professionals need to thrive.

Stay informed with ihowz.uk—and secure your place in Britain’s changing housing landscape