Autumn 2024 Budget Response: Implications for the Sector & Analysis
The Autumn 2024 Budget, the first delivered by a Labour government in 14 years, was presented by Chancellor Rachel Reeves on Wednesday 30 October 2024, introducing key provisions to address pressing issues in the UK social housing sector. In this response, Mobysoft CEO, Paul Evans, highlights the most relevant policies and evaluates their potential impact on housing associations, local councils, and social housing tenants.
Affordable Housing Funding: Limited but Critical Expansion
The budget allocates an additional £500 million to the Affordable Homes Programme (AHP) until 2026, enabling the construction of 5,000 new affordable homes—far short of the government’s target of 1.5 million homes over five years.
Analysis: Whilst this funding is a positive step, it fails to address the sector’s needs. The extra £500 million is a start, but it’s far from sufficient to meet the demand for affordable housing. Developers and housing associations alike will need greater support to achieve sustainable, long-term growth. The allocation pressures housing providers to maximise current resources, potentially leveraging innovative funding models.
Social Housing Rent Cap: CPI + 1% Increase
One notable policy allows social housing providers to raise rents by the Consumer Price Index (CPI) plus 1% over five years. While this cap offers some predictability for providers, it could strain tenants’ budgets amid rising living costs.
Analysis: A predictable rent cap is critical to the sector’s financial health. However, with ongoing inflation, tenants may struggle with additional rent expenses, particularly vulnerable households. Housing providers will likely need to supplement this policy with tenant support services to balance financial stability with affordability.
Boost to Homelessness Prevention Funding
The budget introduces £233 million for homelessness prevention in 2025-26, though allocation details remain uncertain. This funding aligns with Labour’s broader mission to reduce homelessness across the UK.
Analysis: The new funding but notes the importance of effective allocation. Preventing homelessness is crucial, and these resources could significantly improve support for at-risk tenants. However, without targeted strategies, local councils may still struggle to meet the demands of vulnerable populations, underscoring the need for strategic fund distribution.
Public Housing Spending & HRA Borrowing Rate Extension
The Autumn Budget extends the Housing Revenue Account (HRA) borrowing rate discount until March 2026, allowing councils more affordable financing for housing projects.
Analysis: By extending the HRA rate, the government hopes councils can fund essential projects at a lower cost. This discount provides financial relief to councils, potentially enabling them to fund much-needed projects. However, more comprehensive public housing spending will still be necessary to meet the sector’s demands.
Welfare Support & Tenant Assistance Extensions
The budget extends Discretionary Housing Payments (DHP) and the Household Support Fund until March 2025, with £1 billion allocated to help low-income households manage rising living costs.
Analysis: While the extensions provide temporary relief, there have been calls for more sustainable solutions. These funds help tenants in the short term but do not address long-term housing insecurity. The sector needs more comprehensive welfare support beyond temporary programs – a broader welfare approach to provide stability for low-income tenants is what is urgently required.
Energy Efficiency Initiatives & Decarbonisation Funding
An initial £3.4 billion over three years has been allocated to decarbonisation under the Warm Homes Plan, expected to improve 350,000 homes and reduce energy costs for tenants.
Analysis: This funding aligns with the sector’s commitment to sustainability and reducing tenant energy bills. Improving energy efficiency in social housing not only supports climate goals but also benefits tenants financially. However, clarity is needed on how much of this funding will be directed to social housing and how it integrates with the Warm Homes: Social Housing Fund, creating some uncertainty for housing providers planning long-term improvements.
Increased National Insurance and Rising Operational Costs
The Autumn Budget’s National Insurance (NI) rate increase from 13.8% to 15% for employers could impact housing associations’ operational budgets, raising concerns about project costs and staffing.
Analysis: Higher NI contributions add financial pressure for housing associations. Combined with inflation, this will likely strain budgets and impact supply chains tasked with delivering affordable housing. Housing associations and councils may need to reassess project costs and explore efficiencies to minimise the budget impact on staffing and development.
Right to Buy Changes and Incentives for Local Authorities
Local authorities will now retain all receipts from Right to Buy sales, an incentive for councils to invest in affordable housing development.
Analysis: This is largely beneficial for local authorities looking to reinvest in housing. Allowing councils to keep Right to Buy proceeds empowers them to play a proactive role in housing delivery. Yet, without further support for development, the policy’s effectiveness may be limited.
Stamp Duty Reform and Impact on Affordable Housing
An increase in the Stamp Duty Land Tax (SDLT) for second homes is intended to reduce speculative buying and provide first-time buyers a market advantage.
Analysis: The SDLT increase aims to ease access to affordable housing for first-time buyers, though it could pressure the rental market. While this reform may help homeownership, it could inadvertently raise rental prices in high-demand areas. Housing providers should monitor the effects on property availability and affordability within the sector.
Disabled Facilities Grants Increase
The budget adds £86 million to the Disabled Facilities Grant to support housing adaptations for those with social care needs, reducing hospitalisations and promoting independent living.
Analysis: Increased funding for home adaptations will improve tenant quality of life and lower NHS costs. This grant increase is a positive step for aging and disabled tenants in social housing but despite this, the sector may still face challenges meeting high demand for accessible housing.
Conclusion: Promising Steps with Room for Growth
As rising costs and evolving regulations continue to challenge social housing providers, leveraging technology, data insights, and AI-driven platforms becomes crucial to maintaining efficiency and delivering exceptional tenant services. In an environment where every resource counts, housing providers must focus on protecting rental income, improving tenant satisfaction, enhancing productivity, and controlling rising repair costs, all while ensuring high staff morale and effective complaints management.
Mobysoft’s technology platforms, such as RentSense and RepairSense, offer social housing providers the insights they need to drive impactful change. Our solutions support income protection by helping landlords utilise data to surface the insights they need to drive impactful change. Our solutions help sustain tenancies by helping organisations proactively manage arrears, streamline repairs, and handle tenant concerns with greater efficiency. By providing actionable insights through AI and Machine Learning, Mobysoft empowers housing providers to meet regulatory requirements, enhance tenant well-being, and build resilience in a challenging economic landscape.
To fully harness the power of technology in addressing sector challenges however, a solid foundation of reliable, accessible data is essential. A robust data strategy allows social landlords to make accurate, informed data-driven decisions in an agile manner, transforming how they deliver services, engage with tenants, and navigate regulatory requirements. By relying on the right data streams, housing providers can achieve more dependable outcomes, something which is critical as budgets tighten and resources are limited.
If your organisation is taking its first tentative steps towards implementing a data strategy, or if you’re already on that journey and are looking for some further insight then keep an eye on both this website and Mobysoft social channels. We’ll be bringing you a series of content around this very topic in the not too distant future, including our ‘From Data to Decisions: A Comprehensive Guide to Developing and Executing a Data Strategy’ whitepaper early in the new year.
Since joining Mobysoft in 2015, Paul has successfully expanded our client base from 35 to over 150 (with an average customer retention rate of 97%) as well as securing two strategic partnership agreements with leading private equity firms, Livingbridge and ECI, to support the company’s growth.
When he’s not overseeing the strategic direction of Mobysoft, Paul can be found on the golf course or following his beloved Everton FC.
- Autumn 2024 Budget Response: Implications for the Sector & Analysis - October 31, 2024