£39 Billion Social Housing Boost

Labour’s 2025 Spending Review (see BBC summary) allocates a historic £39 billion over ten years to social and affordable housing – nearly doubling funding to £4 billion annually by 2030.  This package includes measures to support refugees, enhance rental income predictability, and energise private sector investment via Homes England.

 Asylum Hotels & PRS Pressure

The government aims to close asylum hotels, relocating residents into the PRS. However, with falling rental supply and no new incentives for landlords, concerns are mounting. Once asylum seekers receive “right to remain,” they’ll enter the PRS—but supply is shrinking, and landlords lack motivation to stay rent‑out ready.

The End of Criminal Vagrancy

After nearly 200 years, the government is set to abolish criminal vagrancy laws, decriminalising rough sleeping and aligning with modern welfare-centered housing strategies.

Regional Infrastructure = Opportunity

Major infrastructure projects across the UK offer landlords strong ROI potential:

• Oxford–Cambridge Arc rail link
• Lower Thames Crossing
• Sizewell C nuclear power station
• Various road & rail developments
• New schools and hospital builds

These initiatives bolster rental demand in those regions, making them strategic investment targets.

Social Housing Quality & Strain

• Poor repair standards persist amid provider failures
• A Local Housing Allowance freeze worsens affordability
• Awaab’s Law mandates fixing damp/mould in social housing from October 2025
• An increase in provider insolvencies (Home REIT, Social Housing REIT) is disrupting rental markets
• Rising costs mean local councils may raise council tax to cover social housing funding gaps

Why Landlords Are Exiting the PRS

With thin margins, no tax relief like rollover relief, rising compliance costs, and a pressure to accommodate asylum seekers and low‑income tenants, many landlords are now leaving the PRS. Without incentives to invest in upgrades for energy performance or to refresh portfolios, the PRS risks shrinking—exacerbating shortages for first-time buyers, migrants, and others reliant on rented homes.

Our View

Unless government introduces meaningful incentives—tax breaks, energy upgrade subsidies, or technical support—landlords will continue to exit the sector. This trend undermines availability in the PRS and hinders the integration of those who cannot yet access homeownership. The £39 billion investment, while significant for social housing, must be matched with initiatives aimed at stabilising and incentivising the private rented sector.

Conclusion

Labour’s spending review marks a momentous step in social housing—but it equally highlights structural weaknesses:

• Historic funding vs disappearing landlord supply
• Major infrastructure opportunities vs rental market exit
• Regulatory reforms like Awaab’s Law vs PRS shrinkage

For a well‑rounded housing ecosystem, policymakers must balance investment with sustainability in the PRS. At iHowz.uk, we continue to monitor developments—aiming to support landlords and agents through strategic changes like these.

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