Autumn Budget 2025: government delays social rent convergence decision but remains ‘committed’ to policy

Kate Henderson, chief executive of the National Housing Federation (NHF), said the trade body was expecting a decision on rent convergence as part of chancellor Rachel Reeves’ Budget and branded the deferral a “delay”.

However, Ms Henderson added: “We look forward to hearing the government’s decision on this in January, which will enable housing associations to put in strong bids for funding through the Social and Affordable Homes Programme and deliver on the government’s housebuilding ambitions.” 

Tracy Harrison, chief executive of the Northern Housing Consortium, called the Budget a “missed opportunity” to give the sector clarity on issues such as rent convergence.

The policy was initially introduced in 2002 and then abandoned by the previous Conservative government in 2015. 

Once resurrected, the rent convergence will see social rent properties that are currently below formula rent increase by an extra amount each year, which would be over and above the Consumer Price Index (CPI) plus 1% limit. 

The government has proposed a maximum £2-per-week uplift, but the NHF and G15 have called for a £3 uplift. However, the Chartered Institute of Housing said that “on balance”, it should be capped at £2 per week.

Elsewhere in the Budget, the Treasury revealed that an extra £1.5bn capital investment will be made in the Warm Homes Plan, which includes funding for social housing and private homes.

However, no detail has yet been given on how that money will be divided.

Ms Henderson said it was “positive” to see the extra £1.5bn announced and she looks forward to “seeing the detail”.

The chancellor also announced that the previous government’s Energy Company Obligation scheme will be scrapped from April 2026. The scheme would make energy companies pay for measures, such as insulation and new heating systems, for low-income households.

As part of this and tax changes, Ms Reeves claimed that household energy bills will be cut on average by £150 a year.  

The sector was also left disappointed at the lack of action on Local Housing Allowance (LHA). Last month, 40 housing sector groups urged the government to unfreeze LHA rates over concerns this risked increasing homelessness levels.

Ms Harrison bemoaned the fact the sector’s pleas have been ignored. She said: “By keeping LHA at the same level while rents rise, the government risks pushing more people, including children and families, into poverty. 

“The continued freeze will increase the number of Northerners facing arrears, eviction, homelessness and temporary accommodation.”

The NHF also criticised the failure by the government to offer money for supporting housing. “It is disappointing not to see any funding announced for supported housing, with many schemes closing across the country due to years of cuts and rising costs,” Ms Henderson stated. 

“We will work with the government to protect this vital resource.”

However, the NHF was among organisations to welcome the removal of the two-child benefit cap, which Ms Henderson said is “set to lift thousands of families out of poverty”.

The Treasury revealed it will consult “shortly” on the reform of VAT rules to “incentivise the development of land intended for social housing”.

A spokesperson for the NHF said the move was welcome, as the body believes it will improve “efficiency and viability”. This is something the NHF had urged the government to do ahead of the Budget.

The Treasury also confirmed it “remains committed” to the 10-year rent settlement announced at the Spending Review, which will allow landlords to increase social housing rents by CPI+1 per cent each year.