A Year of Change: A Look at Labour’s First Year in Government – Labour’s Affordable Housing Challenge

One of Labour’s flagship manifesto commitments was to deliver 1.5m new homes over the course of the Parliament. But with house prices reaching record highs and rents skyrocketing, there is growing pressure on the Government to ensure that these homes are not just delivered (which is in itself a challenge) – but are genuinely affordable. 

Ambition meets reality

After the 2024 General Election, Housing Secretary Angela Rayner declared a ‘council housing revolution’ and secured £1bn for affordable housing in Labour’s first Autumn Budget. That ambition grew with June’s Spending Review, which allocated £39bn for a new 10-year Affordable Homes Programme – aiming to deliver 300,000 affordable homes, at least 60% of which will be for social rent.

Given the scale of demand – with social housing waiting lists in England now exceeding 1.3m – this funding is both welcome and necessary. But beneath the headline figures, cracks are already emerging. 

Funding – and falling short

The Institute for Fiscal Studies suggested that the £39bn may not stretch far enough. The average annual spend under the new programme will be £3bn until the end of the current Parliament – less than the current £3.3bn annual allocation. Analysis by development consultancy Make NW suggests the programme could actually result in 56,000 fewer homes than the previous iteration under the Conservatives, which delivered 355,898 affordable homes over the past decade.

The situation is particularly acute in London, where housing starts by housing associations dropped 92% year-on-year in Q2 2024, with only 150 homes started. Things are no better at City Hall with the Greater London Authority’s latest figures revealing that just 871 homes have been completed under the current 2021-2026 Affordable Homes Programme – a mere 5% of its 17,800-home target by 2030. Despite these challenges – and after nearly a decade in power – Mayor Sadiq Khan now claims he can deliver 40,000 new council homes by 2030, unveiling a £3.5bn housebuilding programme for London last week. He highlighted that 8,000 new homes were started via his Land Fund, five years ahead of schedule, and developers completing 11,600 homes across the capital last year – but City Hall Conservatives were quick to criticise this as ‘smoke and mirrors’, noting it’s only an eighth of London’s target of 87,992 new homes annually.

Planning for affordability

The Government’s New Towns plan represents another route to boosting housing supply. Each of the new settlements – which are expected to deliver at least 10,000 homes – will dedicate 40% to affordable housing. While the emphasis on embedding affordability from the outset signals intent, it has already raised concerns. A House of Lords inquiry into new towns recently heard that housing associations will find it ‘difficult’ to take on affordable homes if the 40% target is enforced – citing viability challenges and delivery risk. Without stronger financial incentives or greater clarity over funding models, the ambition may prove difficult in practice.

Structural barriers remain

Labour has moved to address the systemic issues which hamper delivery. Last year, Homes England launched a database to match buyers and sellers of Section 106 affordable homes – as social landlords are increasingly reluctant to acquire them due to poor build quality, lack of transparency, and cost concerns. But progress is slow: just 1,500 homes have been registered out of 17,400 identified.

Meanwhile, new Right to Buy reforms could have a long-term impact. Newly built council homes will now be exempt from the scheme for 35 years, while the tenancy requirement has been raised from three to ten years. Since 1980, Right to Buy has seen 1.9m homes sold – with many never replaced, depleting the overall stock of affordable housing across the country.

The Government is also consulting on reintroducing social rent convergence – a move that could raise an estimated £773m over 10 years if rents were to rise by just £3 per week. The Housing Forum notes that average social rents have fallen in real terms over the past decade, and this policy could help fund investment in new homes and the maintenance of existing stock.

Big ambitions, bigger obstacles

Labour has set itself a high bar – and rightly so. But turning bold promises into bricks and mortar will take more than funding announcements. Viability challenges, planning system delays, skills shortages, and inflationary pressures all risk slowing progress. The upcoming long-term housing strategy, expected later this year, will need to offer more than ambition – it must provide the detail, reforms and delivery mechanisms needed to meet targets and restore confidence in the country’s broken housing system.

Affordable housing is not just a numbers game. It’s about ensuring that working people can afford to live in secure, quality homes in the communities they serve. A year in, the Government has laid out its intentions. The real test now is delivery.