Affordable Homes Programme 2021 to 2026: bid for funding

Information for housing providers about funding for the development of affordable housing through the Affordable Homes Programme 2021 to 2026.

What the funding is for

The Affordable Homes Programme (AHP) 2021 to 2026 provides grant funding to support the capital costs of developing affordable housing in England. 

The National Planning Policy Framework defines affordable housing as housing for sale or rent for those whose needs are not met by the market. 

Homes England has £7.39£8.03 billion of government funding to deliver upat toleast 130,000100,000 affordable homes outside of London by the end of March 2026. We’re committed to working closely with a diverse range of partners – both existing and those we haven’t previously worked with – to maximise the impact of this funding. 

This guidance is about bidding for funding on a scheme-by-scheme basis, known as the Continuous Market Engagement (CME) funding route. 

When we launched the programme, we also offered a Strategic Partnerships funding route, but this has now closed. Read about funding allocations for Strategic Partners.  If you’re an existing Strategic Partner, you can read guidance on programme requirements for Strategic Partnerships. 

In February 2023 and June 2023, the funding parameters of the AHP 2021 to 2026 changed in response to challenges in the economy and housing market, and to support of the government’s affordable housing priorities. This is explained further below.

In addition, between 6 November and 17 November we invited partners to submit proposals for affordable housing grant to support near-term delivery of affordable housing where it meets AHP 2021 to 2026 additionality requirements. This was in response to market sentiment which indicated an increased number of investment opportunities. Individual proposals were required to support the delivery of a minimum of 500 additional affordable homes. Terms were secured through the existing contractual framework in place for current grant recipients and a CME contract for new entrants.   

Funding for affordable housing in London

If you want funding to develop affordable housing in London, apply through the Greater London Authority.

Types of housing and tenure supported by the funding

AHP funding is primarily for the supply of new-build affordable housing. It supports:

• homes for rent 

• homes for ownership (we refer to this as ‘routes into home ownership’)

• homes in rural settlements and supported housing for older, disabled or vulnerable people

Read the Capital Funding Guide for detailed rules and guidance on each type of housing and tenure (the conditions under which someone can occupy a home).

Homes for rent

AHP funding supports the supply of homes across England (except London) for:

• Affordable Rent – where the rent is up to 80% of the current market rate

• Social Rent – where the rent is based on a government formula

Social Rent is usually a lower rent level than Affordable Rent. For more information on these rent levels, read the government’s policy on rents for social housing. 

Social Rent is a priority for the AHP funding and Social Rent-specific grant rates can be accessed in all parts of the country subject to meeting our value-for-money assessments.

The Right to Shared Ownership (RtSO) applies to rented homes funded through the AHP 2021 to 2026. This allows eligible tenants to buy a share of their rented home on Shared Ownership terms. For more information, including property exemptions and eligibility criteria, read the government’s guidance for registered providers on the Right to Shared Ownership and Right to Shared Ownership – guide for tenants.

Homes for ownership

AHP funding supports the supply of homes for the following routes into home ownership: 

• Shared Ownership – allows people to buy a share of a home and pay rent on the remaining share

• Home Ownership for People with Long-Term Disabilities (HOLD) – a type of Shared Ownership that helps people with a long-term disability buy a home that meets their specific needs

• Older Persons Shared Ownership (OPSO) – a type of Shared Ownership available to people aged 55 or over, often with specific design features

• Rent to Buy – homes let to working households at a below-market rent level so they can save for a deposit to buy their first home

We recognise that some partners may have a reduced appetite for market-sale risk associated with delivering home ownership tenures. So we’ll be flexible in our assessment of the strategic fit of proposals with routes into home ownership.

Acquisition of homes built for market sale

We expect most schemes to deliver homes through new land-led delivery (building homes on land you’ve acquired for the purpose). However, we’ll consider proposals that include homes that were originally built for market sale where this:

• is near-term delivery and will help keep the market moving – for example, through the acquisition of unsold new-build homes or through funding future new-build delivery

• will contribute towards the delivery of supported housing, including through remodelling or improving existing housing stock

Other types of development

The funding also supports the development of:

• Regeneration – to fund replacement homes where they are being delivered alongside net additional affordable housing. See below for more details.

• Supported housing for older, disabled or vulnerable people – any housing scheme where accommodation is provided alongside care, support or supervision to help people live as independently as possible in the community

• Rural housing – housing delivered in settlements with a population of less than 3,000

• Traveller pitches – new sites, or new pitches on existing sites, to help meet the accommodation needs of Traveller communities

• Empty homes – homes brought back into use as affordable housing, either through purchase and repair or lease and repair

Regeneration

Proposals to deliver replacement affordable homes will need to:

• unlock net additional homes, alongside the replacement homes 

• start on site by 31 March 2025

• complete by the relevant contractual longstop date

• minimise the amount of grant requested per home

• demonstrate certainty of delivery

• align with the priorities of the relevant housing authority

• align with the existing strategic objectives of the AHP

All proposals, including those from Strategic Partners, must be submitted through the CME route. Strategic Partners must submit proposals for the scheme specific level of grant required. Approved schemes will then form part of the existing Strategic Partnerships Grant Agreements.

Supporting statements will also be required in a standard template that can be requested from your usual Homes England contact or by emailing AHPFAQ@homesengland.gov.uk .

Funding decisions will be made on a regular basis up until the end of March 2025, subject to availability of resources. 

If you have any queries or would like to discuss a potential scheme, contact AHPFAQ@homesengland.gov.uk or speak to your existing contact in the Affordable Housing Grants Team.

The funding’s wider strategic objectives

The funding supports some wider strategic objectives, including:

• use of Modern Methods of Construction (MMC)

• use of the National Design Guide, which is part of the government’s collection of planning practice guidance within the National Planning Policy Framework

• improvement of the energy efficiency and sustainability of new affordable housing

• use of small and medium-sized enterprise contractors

When we assess a bid for funding, we look at how the proposed development meets our strategic objectives. We also include the objectives in our grant agreement.

Who can bid for funding

We welcome proposals from existing and new partners, including: 

• charities

• community organisations

• for-profit housing providers

• housing associations

• housing developers

• local authorities

You can bid for funding as an individual organisation or as part of a partnership or consortium.

Landlords of rented homes built with AHP 2021 to 2026 funding must, by law, be a registered provider. This means you must be registered with the Regulator of Social Housing (RSH), a process which can take at least 6 months. All registered providers are also required to be members of the Housing Ombudsman Service.

If your organisation is an ‘unregistered body’ (not registered with the RSH), you can still bid for funding to develop homes for rent – but once you’ve completed them, you must pass on ownership and management to a registered provider. Unregistered bodies can, however, own and manage Shared Ownership homes. Unregistered bodies can sign up to the Housing Ombudsman Service on a voluntary basis.

When to bid

The Continuous Market Engagement (CME) funding route allows you to bid for funding for one or more development schemes at any time during the programme while funding is available. 

Schemes funded through CME must:

• start on site by 30 September 2025

• be complete by 31 March 2026

How to bid

Read guidance on bidding for AHP funding through the CME route. 

If you would like to discuss a potential bid, contact us: AHPFAQ@homesengland.gov.uk.

How we assess bids

We assess CME bids against the following criteria:

• cost minimisation 

• deliverability 

• alignment with the strategic objectives

We expect you to take all reasonable measures to minimise the amount of grant you’re requesting (cost minimisation). Our primary assessment metric is grant per home which we benchmark against national, local and scheme-type averages to ensure bids are competitive for costs and outputs. 

We need to ensure schemes can be delivered within the funding timeframe. When we assess deliverability, we take into account the progress you’ve made with your scheme (for example, with planning permission and land ownership) at the point of bidding. We also assess past performance where relevant, and how bids support local authorities in meeting local housing needs.

Partner qualification and contract for funding

Once you’ve secured a funding allocation, you must meet certain requirements before you can receive the funding.

Investment partner qualification and due diligence checks

You must be a qualified Investment Partner to receive grant from Homes England, unless you’re in a consortium – in which case, only the lead organisation of the consortium needs to be an Investment Partner. 

Investment Partner status confirms you:

• are eligible to be a partner (for example, registered providers must be compliant with all standards set by the Regulator of Social Housing)

• have the financial and technical capacity to deliver your proposed scheme(s)

• have financial and legal ‘good standing’ (for example – you have the full power and authority to enter into an agreement with Homes England)

You can apply for Investment Partner status:

• at the same time as you submit a bid for funding under the AHP or;

• after your bid has been successful and you’ve secured a funding allocation

However, we’ll only assess your application after you’ve secured a funding allocation.

For further information see Apply for Investment Partner status. We may also ask you to supply information for our ‘Know Your Customer’ due diligence checks.

Working with the Regulator of Social Housing

The Regulator of Social Housing will provide advice to Homes England on whether any proposal to award grant to a registered provider will have an adverse impact on the Regulator’s published judgement on the organisation’s governance and financial viability rating. Registered providers may be asked to provide additional information to the Regulator to inform the assessment as necessary.

Grant agreement

Investment Partners need to enter into a new supply agreement with us. This is known as the grant agreement (or contract). You can read examples of the AHP grant agreement.

Receiving grant payments

The Capital Funding Guide contains detailed information on grant payments for the CME funding route.

CME payments for registered providers

If you’re a registered provider, we’ll pay you the grant when you achieve certain delivery milestones. In most cases, we pay:

• 40% at site acquisition

• 35% at start on site 

• 25% at practical completion

There may be different payment arrangements in place for some types of scheme. In some instances, you may be able to claim up to 95% of the payment at start on site.

CME payments for unregistered bodies (URBs)

If you’re an URB, we’ll pay you 100% of the funding at practical completion of the scheme. 

Alternatively, if you provide satisfactory forms of security you can ask us to pay you:

• 40% at acquisition

• 35% at start on site (or 75% if you don’t claim at acquisition) 

• 25% at practical completion 

If you choose this option, we’ll also carry out any necessary due diligence checks on any other organisation providing the security.

Reporting on progress

You must report on delivery at regular intervals. This includes providing data and metrics relating to the strategic priorities of the programme.

We also carry out an annual ‘compliance audit’ on a sample of schemes to ensure partners have met our requirements. We’ll let you know if we’ve selected you for an audit. 

The Capital Funding Guide contains detailed information on reporting and audit requirements for the CME funding route. 

You can also read guidance on the compliance audit process.

Transparency with costs and spending

We publish information relating to the costs and spending of the schemes we fund through the Affordable Homes Programme. As a condition of funding, there are contractual obligations for partners around the sharing and publishing of this information. 

You must supply information about development costs and agree we can verify this at any stage (this is known as an ‘open book basis’). 

If we award you funding of more than £3 million, you must publish details of spending over £500 relating to your development schemes on a quarterly basis. We may also publish this information.

Contact us

If you have any queries or would like to discuss a potential bid, contact us at AHPFAQ@homesengland.gov.uk or speak to your Homes England contract manager in the Affordable Housing Grants Team.