In a letter dated 25 August 2026 to all council leaders in England, the Secretary of State for Housing, Communities and Local Government, Angela Rayner, and the Minister of State for Housing and Planning, Matthew Pennycook, combine an allocation announcement with a delivery instruction. The document confirms the first allocations from the Social and Affordable Homes Programme and says councils are expected to raise their ambition for new council homes while supplying information that will allow future support to be targeted. The letter frames the intervention against long waiting lists and almost 180,000 children in temporary accommodation, including more than 100,000 in London. (gov.uk)
The funding backdrop is sizeable. The Social and Affordable Homes Programme is a ten-year, £39 billion investment programme, with a published target that at least 60% of homes delivered through it should be for Social Rent. In the first major allocation outside London, £9.58 billion is going to 33 Strategic Partners to support 73,600 new social and affordable homes, with nearly two-thirds expected to be for Social Rent. In London, ministers say 30% of early-years programme funding will go to the capital, with up to £11.7 billion across the life of the programme and at least £6 billion intended for providers operating there. (gov.uk)
The letter also signals a change in who ministers want to see building. It states that remaining programme funding will prioritise Social Rent homes and, in particular, council homes. For the first time, three councils - Cambridge City Council, Eastleigh Borough Council and Newcastle City Council - have been given Strategic Partnership status with Homes England, which the department presents as evidence that councils are expected to take a stronger lead delivery role where they have the capacity to do so. (assets.publishing.service.gov.uk)
For councils, the immediate message is practical. Ministers are asking authorities to revisit their plans for increasing council housing supply, examine their finances, make active use of Right to Buy receipts, use Section 106 opportunities more fully, review whether council-owned land and buildings can support development, and prepare ambitious bids for the remaining programme funding. The same letter asks councils to state plainly what is still stopping them from building more quickly and at greater scale. (assets.publishing.service.gov.uk)
That request is being formalised through a short return enclosed with the letter. Councils are asked to provide information on planned new council homes, the use of Right to Buy receipts and developer contributions, land availability, and any further support or flexibilities they need. Authorities outside London have been asked to respond by 22 September 2026, while London councils have until 16 October 2026. The letter says those responses will feed directly into government thinking ahead of the Autumn Budget and shape targeted support. (assets.publishing.service.gov.uk)
The request is being set alongside a broader package already in place. The letter points to earlier changes over the past two years, including full retention of Right to Buy receipts, a ten-year social housing rent settlement at CPI+1%, Social Rent convergence, extended preferential Public Works Loan Board rates to the end of March 2027, and a higher threshold for when a council must open a Housing Revenue Account. The new addition is an extra £46 million over three years for the rebranded Capacity to Build offer, delivered with Homes England and the Local Government Association through the Council Housebuilding Support Fund, the Council Housebuilding Support Service and an expanded Pathways to Planning scheme. (assets.publishing.service.gov.uk)
The practical effect is that councils now have both a reporting deadline and a live route into future rounds. More than £16 billion outside London and around £5 billion in London remains to be allocated, and ministers say later years of the programme will move more funding directly to Established Mayoral Strategic Authorities. Separately, Homes England says the Council Housebuilding Support Fund will provide £21.8 million in revenue funding to 31 March 2029, with applications from councils outside London opening in September 2026, single proposals worth up to £300,000 in each of the three years, and decisions from November 2026. Read alongside the letter, the policy is clear: councils are being offered more grant, more delivery support and some additional flexibilities, but they are also being asked to show land, finance and schemes that can move quickly. (gov.uk)