Social and Affordable Homes Programmes (SAHP)

The Social and Affordable Homes Programme (SAHP) and the London Social and Affordable Homes Programme (LSAHP) is the long term 10 year programme that the housing sector have been seeking for many years. It represents significant long-term funding for organisations delivering affordable housing across England and within London. As with previous grant funding programmes, these capital grant programmes are key to supporting the delivery of social, affordable and specialist housing by local authorities, Registered Providers and development partners over the next decade and supporting the Government’s ambitious housing delivery target. Perhaps most importantly, it will allow organisations to develop longer term business plans for their development programmes, removing uncertainty and breaking the historic 4-5 year grant cycle with the associated peaks and troughs of funding and development activity that that brings.

SAHP 

Homes England will administer the SAHP using at least £27.3 billion of Government funding to support the capital costs of developing new affordable housing outside of London. This will be used to deliver general needs homes for rent and ownership, specialist and supported housing, community-led housing and rural homes, and regeneration of existing estates as part of the wider national commitment to build 1.5 million homes by mid-2029. The SAHP increases the focus on Social Rent increasing the expected minimum of 50% under the previous 2021-2026 programme to an expectation of a minimum of 60% of SAHP-funded homes to be delivered for Social Rent.

Whilst there is currently little detail about the specific SAHP programme requirements, Homes England has indicated that the expected funding routes are:

1. Continuous Market Engagement (CME) which will be split into two strands:
   
   1. General – which appears to essentially follow the current form of CME – i.e. bids on a scheme by scheme basis for grant with payment against specific delivery milestones;
   2. Portfolio – this is a new route of funding specific to SAHP and seeks to bridge the gap between General CME and SP. this is aimed at organisations which have substantial development programmes but, presumably, those programmes are not substantial enough to warrant becoming a Strategic Partner.  We expect that this will offer a pot of funding for a programme similar to SP but with funding payable at specific delivery milestones.
2. Strategic Partnership – which appears to be along the lines of the existing SP arrangements under the 2021-2026 programme. However, the minimum number of homes required to be delivered differs depending on the nature of the bidding entity, as does the maximum capped amount of funding available for that entity. HE will take into account existing delivery obligations and funding under existing SP arrangements (when considering the cap on funding) on a rolling basis. If SPs have uncommitted SP Grant from a previous programme this will, presumably, be netted off the cap when assessing how much funding an SP can bid for under SAHP.

There is also a new element to SP of Strategic Partner Plus available only to existing SP partners but with considerably higher delivery targets for those SP partners who can demonstrate appetite and capability to deliver at this higher level.     

LSAHP

The GLA will administer the LSAHP for affordable housing delivery within London, providing up to £11.7 billion of funding. As one would expect, the focus of the LSAHP is different to the SAHP and will focus on social rent, shared ownership, intermediate rent (including key workers) and London Living Rent, all of which are clearly aimed at prioritising meeting the capital's acute housing needs and delivering a range of affordable tenure types tailored to local demand.

As with the SAHP, there is currently little detail about the specific LSAHP programme requirements. The GLA has indicated that the expected funding routes are:

1. Indicative proposals - this is the GLA longer term delivery route where providers are to “be ambitious” and bid for an indicative programme of delivery over the 10 year term of the LSAHP. There is no specific route, as such, for bidders to apply for Strategic Partner status. This will be assessed by the GLA based on a ranking methodology using the number of social and affordable homes to be provided with the “top” bidders being awarded SP status.
2. Continuous Market Engagement (CME) which will not open until the indicative proposal process has been completed. Whilst it appears that the CME will follow the “traditional” route of considering bids on a scheme by scheme basis for grant with payment against specific delivery milestones, there is an indication that, due to the length of the LSAHP, the GLA may open an “indicative” proposal route within CME part way through the programme. There is no real detail on this yet but we expect it will be akin to the “Portfolio” CME approach announced as part of HE’s SAHP.

Applications and Delivery

Local authorities, Registered Providers and other organisations intending to apply for funding under these programmes should plan early in line with the anticipated application timetable and will need to demonstrate how their project will deliver against the national (or London) priorities.  Those developing projects in Mayoral Combined Authority areas will also need to factor in the strategic ambition and priorities of the Combined Authority.  Current indications are that the first bidding round under both programmes will open for applications in February 2026, with funding decisions expected around April 2026.

Both SAHP and LSAHP indicate that grant recipients cannot use grant to deliver social and affordable homes secured by developer contributions through section 106 of the Town and Country Planning Act 1990 or equivalent planning conditions, which is the case on the current programmes and is not surprising.

There is, however, an indication in both SAHP and LSAHP that successful bidders are expected to continue to support delivery of affordable housing by acquiring units under section 106 Agreements. It isn’t clear what, if any, implications there will be if grant recipients fail to do so but is perhaps a nod to the reports over the last couple of years of hundreds of section 106 affordable dwellings remaining unsold and unoccupied.

£2.5bn low-interest loans

The Government has provided further detail on its proposed low-interest loans and has now confirmed that they will be unsecured and subordinated with an interest rate of 0.1% and a term of 25 years. This provides a mechanism for the Government to support Registered Providers that are facing interest cover constraints in raising the debt necessary to leverage grant received under the SAHP and LSAHP. There is likely to be high demand for the loans which will be made available through a competitive bidding process similar to SAHP and Registered Providers will need to demonstrate additionality.

Subsidy Control

Subsidy control remains a key consideration for the SAHP and both programmes are ‘subsidy schemes of particular interest’ and so have had to be referred to the Competition and Markets Authority (CMA) for review. Homes England has completed this process and its subsidy scheme has been formally made and published on the subsidy database. The GLA’s subsidy scheme has also been considered by the CMA and the CMA’s report is due for publication on 3 February. The GLA will need to consider the CMA’s comments before finalising its scheme, and this may result in adjustments to the final scheme design.

How can Bevan Brittan help

Our Housing and Subsidy Control teams have many years of experience working with affordable housing providers, local authorities and private developers across the housing sector on grant funding arrangements and delivery of development schemes through grant funding programmes.

We have advised a wide range of organisations over the years on the various government grant funding programmes including, in more recent years on the Homes England Strategic Partnership Agreements, consortium arrangements and entry of new consortium members.

Our teams work closely together to provide practical, joined-up advice on funding applications, grant documentation, delivery structures and compliance, and are available to support organisations in the housing sector throughout the application and delivery process. 

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