Around £5 billion of funding for London's new Social and Affordable Homes Programme is still to be allocated, according to Housing and Planning Minister Matthew Pennycook, leaving a substantial further pipeline of grant funding for housing schemes across the capital. The minister said the Greater London Authority is set to offer allocations of at least £6 billion in the capital from the programme, while around £5 billion remains for later allocation. The figures sit within London's wider programme of up to £11.7 billion running from 2026 to 2036.
Matthew Pennycook MP, Housing and Planning Minister. Image: UK Government / Crown copyright.
Around £5bn remains after heavily oversubscribed bidding
Speaking at the Housing Community Summit in Liverpool on 9 September, Pennycook said bids submitted to Homes England and the GLA had substantially exceeded the funding available in the first wave. His Housing Community Summit speech confirmed that more than £16 billion remains to be allocated outside London and around £5 billion remains in the capital. The London figure is not a new £5 billion construction programme or a collection of awarded contracts. It is the portion of the wider affordable housing funding envelope that has not yet been allocated to individual providers and schemes. Contractor appointments, procurement routes and construction starts will therefore emerge project by project rather than from the funding announcement itself.
City Hall had already confirmed that the initial bidding round was significantly oversubscribed. In July, the GLA said applicants had been given an opportunity to revise their bids, with greater emphasis placed on delivery confidence and value for money before final allocations were agreed. The GLA funding guidance says unallocated funding can subsequently be accessed through Continuous Market Engagement, with future bids focused on named projects. Funding can support schemes starting on site through to March 2036, with completion permitted up to March 2039.
Funding strengthens the pipeline, but does not guarantee starts
For London's construction market, the remaining funding matters because residential viability remains one of the capital's most difficult delivery problems. Public grant can reduce the viability gap on schemes that would otherwise struggle to proceed, particularly where high land values, financing costs, construction inflation and affordable housing requirements place pressure on development appraisals. But funding allocation is only one stage. A funded project may still require planning approval, land assembly, detailed design, procurement and, for higher-risk residential buildings, Building Safety Regulator approval before main construction can begin.
That distinction has become increasingly important in London. London Construction Magazine's 2027 construction market analysis found that publicly supported housing is better positioned than speculative private residential development, but also warned that programme funding should not be confused with physical project starts. The scale of the underlying demand is considerable. Recent GLA analysis put London's assessed housing need at around 89,300 homes a year, while the emerging London Plan uses a lower capacity-based delivery figure. LCM examined that gap separately in its analysis of London's 89,300-home annual housing need.
Council housing moves higher up the funding priority
Pennycook also made clear that future allocations will prioritise Social Rent, with particular emphasis on council-led delivery. The government is examining additional measures including low-cost borrowing and greater access for councils to the Social and Affordable Homes Programme. The GLA's programme guidance already supports local authorities, registered providers, developers and other eligible organisations. At least 60% of homes delivered through the programme are expected to be for Social Rent, while the funding can also support shared ownership, intermediate rent and London Living Rent.
Pennycook said ministers intend to deliver the "biggest council housebuilding programme since the post-war boom ended in the early 1980s". Housing associations will remain part of the delivery model, with government encouraging joint ventures and other partnerships between councils and registered providers. The council-housebuilding emphasis also develops the housing element of the programme examined in LCM's earlier analysis of Andy Burnham's construction and infrastructure plans. The test now moves from policy direction to site-specific allocations, procurement and executable projects.
What contractors should watch next
For contractors, consultants and specialist suppliers, the useful information will come when the remaining funding is attached to identifiable sites. Named allocations can then begin to reveal project scale, planning position, delivery partners and procurement routes. The GLA's funding guidance states that future unallocated funding will be available through Continuous Market Engagement for named projects. Until individual schemes, delivery programmes and procurement arrangements are confirmed, the remaining £5 billion should be treated as potential future workload rather than committed construction expenditure.
|
Expert Verification & Authorship: Mihai Chelmus
Founder, London Construction Magazine | Construction Testing & Investigation Specialist |
