The extra money will assist in building 18,000 new social and affordable homes, contributing to the Labour Government’s pledge to build one-and-a-half million homes by the next election.
The Ministry of Housing added that the investment was a “down payment” from the Treasury ahead of a “more long-term investment in social and affordable housing planned later this year”.
Construction on new affordable homes will start in March 2027 and will be completed by the end of Parliament, the Ministry of Housing said.
The Government urged providers to “come forwards as soon as possible with projects and bids to ramp up the delivery of new housing supply, in turn making the dream of homeownership a reality for more people across the country”.
The Ministry of Housing said it will “unlock development and opportunity” on sites that are “ready and waiting”, including spaces such as Manchester and Liverpool.
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The move also comes off the back of Government plans to invest in training 60,000 construction workers to “tackle skills shortages and get more young people into jobs”.
Angela Rayner, deputy Prime Minister and Housing Secretary, said: “Everyone deserves to have a safe and secure roof over their heads and a place to call their own, but the reality is that far too many people have been frozen out of homeownership or denied the chance to rent a home they can afford thanks to the housing crisis we’ve inherited.
“This investment will help us to build thousands more affordable homes to buy and rent and get working people and families into secure homes and onto the housing ladder. This is just the latest in delivering our Plan for Change mission to build 1.5 million homes, and the biggest increase in social and affordable housing in a generation.”
Chancellor Rachel Reeves said: “We are fixing the housing crisis in this country with the biggest boost in social and affordable housebuilding in a generation. Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people’s pockets.”
Media reports have suggested that the move is to allegedly appease the left of the Labour party, which is dissatisfied with rumoured cuts in spending that could be announced in the Spring Statement.
Proposed spending cuts include a freeze on income tax and National Insurance thresholds, as well as changes to inheritance tax thresholds.
Industry figures have called for the Government not to go for quick fixes when it comes to housing.
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Govt to make £2bn investment in social and affordable housing
