• Damon Butcher

Affordable Homes Programme

Updated: Apr 22

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Summary:

Affordable housing, as defined by the National Planning Policy Framework, is housing for sale or rent for those whose needs are not met by the market. The provision of affordable housing is a key element of the Government’s plan to end the housing crisis, tackle homelessness and provide aspiring homeowners with a step onto the housing ladder.

The Affordable Homes Programme provides grant funding to support the capital costs of developing affordable housing for rent or sale. As the Government’s housing accelerator, Homes England will be making available £7.39 billion from April 2021 to deliver up to 130,000 affordable homes by March 2026 – outside of London. Partners looking to develop affordable housing in London can find more information on the Greater London Authority’s website.


Close date: 04/02/2026

Collaboration: Single or Collaborative

Funding Type: Innovation Grant

Fund Provider(s): Homes England

Industries: Property Development, Net Zero


 

Homes England is committed to working closely with a diverse range of partners – both existing and those we haven’t previously worked with – to maximise the impact of this funding. In return, we expect partners to share the ambitions set out in Homes England’s strategic plan to create a more resilient and diverse housing market. This means partners will also be expected to focus on promoting significant use of Modern Methods of Construction (MMC), high-quality sustainable design and working closely with local small to medium-sized enterprises (SME) housebuilders.

What this funding is for

The funding is for the supply of new build affordable housing.

The information below provides an overview of the standard tenures and types of housing supported. Please refer to the detailed guidance for specific rules around each tenure set out in the Capital Funding Guide.

Homes for rent (around half of homes delivered)

There are 2 types of rent: social and affordable rent.


Social Rent

Homes let at below market rent by a registered provider. The rent level is calculated according to a formula based on property values and local earnings (target rent). This is set out in the Regulator of Social Housing’s Rent Standard. . For full details, please refer to the Social Rent guidance in the Capital Funding Guide.

Social Rent homes can be funded within areas of high affordability challenge, as defined by government for the AHP 2021 to 2026, or elsewhere provided that the grant requested is not higher than it would be for Affordable Rent


Affordable Rent

Homes let at below market rent by a registered provider. The rent (including service charge) is set at up to 80% of the local market rent for an equivalent home. For full details, please refer to the Affordable Rent guidance in the Capital Funding Guide.

Routes into Home Ownership (around half of homes delivered)

There are 4 types of home ownership routes: shared, ownership for people with long term disabilities, older persons shared ownership and Rent to Buy.


Shared Ownership

Shared Ownership allows a customer to purchase a share of a home and pay rent on the remaining share. The new Shared Ownership model sets the minimum share for purchase at 10% and places the repair and maintenance liability with the provider for the first 10 years. Further details are set out in the Shared Ownership guidance.


Home Ownership for people with Long term Disabilities (HOLD)

Shared Ownership purchase of a home on the open market for people with a long-term disability who are unable to find a new build home which meets their specific needs. Please see the detailed guidance on HOLD for more information.


Older persons Shared Ownership (OPSO)

Shared Ownership available to over-55s. Ownership is capped at 75% of the value of the home. Once this cap is reached, no rent is payable on the remaining share. Please see the detailed guidance on OPSO for more information.


Rent to Buy

Homes let to working households at a lower cost to give them the opportunity to save for a deposit to buy their first home. The rent (including service charge) is set at or below 80% of the market rent for an equivalent home for at least five years to allow a tenant to save for a deposit or purchase sooner via Shared Ownership. Full details are set out in the Rent to Buy guidance.

This funding supports the development of:


Supported Housing (10% of homes delivered) - any housing scheme where accommodation is provided alongside care, support or supervision to help people live as independently as possible in the community. See the Capital Funding Guide for information on the specific client groups that this funding covers. Supported housing can be developed both through new build and repurposing/improvement of existing homes. For details, refer to the guidance on re-improvement.


Rural Housing (10% of homes delivered) - housing delivered in settlements with a population fewer than 3,000.


Traveller pitches - funding to develop new sites and to add new pitches onto existing sites, to help meet the accommodation needs of traveller communities. For details, refer to the guidance on traveller pitches.


Empty homes - affordable homes can also be created by bringing existing empty homes back into use. Please see detailed guidance on purchase and repair (our preferred model) and lease and repair options.

Please note, this funding does not provide grant for:


Regeneration – the replacement of homes demolished through regeneration work is not eligible for funding. A grant may be available to support the delivery of net additional affordable homes on those schemes.


Section 106 - the purchase of homes built under Section 106 agreements, where the affordable homes are secured through developer contributions is not funded. However, we still record information on all nil-grant affordable homes for rent and reporting requirements will be set out in the contract.


Major Repairs – works to ensure homes are habitable are not eligible for funding as this is the responsibility of the provider (see further guidance on major repairs). We may award funding in exceptional circumstances, in the case of alms houses for example, where the charity isn’t able to cover the cost of works itself.

The Right to Shared Ownership (RTSO) will apply to all grant funded, rented homes, with some specific exemptions on types of home and for certain providers, which will be explained in the guidance. Exemptions may also be given if there are clear business reasons for the provider not to sell, for example if the market value is lower than the cost of developing the home (including financing costs). Please see the Right to Shared Ownership (RTSO) guidance for further information.


The funding also supports wider strategic objectives, including:

  • Placing significant focus on and investment in Modern Methods of Construction outlined in the MMC section of the Capital Funding Guide. There is more information in the MMC definition framework, which sets out the 7 categories of MMC in detail.

  • Encouraging uptake of the National Design Guide, which is part of the government’s collection of planning practice guidance within the National Planning Policy Framework.

  • Improving the energy efficiency and sustainability of new affordable housing supply.

  • Encouraging the use of SME contractors.

To allow for this, some of these elements are included in the assessment criteria for funding applications, and others are included in the standard conditions of funding.




 

Link: Apply for affordable housing funding

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