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The chancellor will tomorrow (Wednesday) announce a 拢39bn Affordable Homes Programme and a 10-year rent settlement in what appears to be a major victory for the social housing sector.

The Treasury has confirmed that the next Affordable Homes Programme (AHP) will run for 10 years, meaning 拢3.9bn of funding a year on average, a significant increase on the 拢2.5bn allocated annually under the 2021-26 programme once 鈥榯op-ups鈥� were taken into account.

The amount is significantly more than the 拢25bn the Financial Times reported as being considered by Rachel Reeves.

It appears that housing secretary and deputy prime minister Angela Rayner has ultimately come away with a better deal than expected following days of negotiations within Whitehall.

The Treasury confirmed a 10-year rent settlement which will see social housing rents rise by Consumer Price Index (CPI) plus 1%. This is higher than the five-year settlement proposed by the government as its preferred option last year.

The government will also consult on how to implement the return of rent convergence 鈥� another major ask of the social housing sector.

Rent convergence is a policy which had allowed cheaper rents to rise more quickly to ensure alignment between rents on different properties. The scrapping of the policy in 2015 has been estimated by the G15 group of London鈥檚 leading housing associations to have cost its members 拢2bn.

The government had appeared to rule out a return to convergence last year when it raised concerns about the impact on welfare spending and cost of living challenges for households in a consultation paper.

The Treasury release on Tuesday night did not say anything about reported plans to redesignate Homes England as a a 鈥減ublic finance institution鈥� - dubbed as a 鈥渉ousing bank鈥� by insiders, to enable it to create financial assets through big investments or large scale lending.

The move would reportedly allow Homes England to deliver more finance to the housing industry and lowering the capital cost for housing developers.

The release also did not say whether the government will look to reclassify housing as critical infrastructure.

A government source said: 鈥淭he government is investing in Britain鈥檚 renewal, so working people are better off. We鈥檙e turning the tide against the unacceptable housing crisis in this country with the biggest boost to social and affordable housing investment in a generation, delivering on our plan for change commitment to get Britain building.鈥�

Kate Henderson, chief executive of the National Housing Federation, described the funding and rent settlement as a 鈥渢ransformational package for social housing鈥� that will 鈥渄eliver the right conditions for a decade of renewal and growth鈥�.

She said: 鈥淭his is the most ambitious Affordable Homes Programme in decades and alongside long-term certainty on rents, will kickstart a generational boost in the delivery of new social homes.鈥�

Melanie Leech, chief executive at the British Property Federation, said: 鈥淲ith really tough choices to be made in the spending review we are delighted that the government has prioritised the delivery of affordable and social housing and that it is investing significant additional sums to support a sector that has faced tough headwinds in recent years.鈥�

Leech said the 10-year rent settlement is a 鈥渟ignificant step forward to help the sector to plan with more certainty and to help unlock the huge amount of long term private capital such as pension funds, that wants to invest in genuinely affordable homes.鈥�

Stephen Teagle, chief executive, partnerships and regeneration at Vistry Group, said the funding will have a 鈥渢ransformative impact鈥� on its ability to deliver affordable and mixed-tenure homes.

He said: 鈥滻t is great news for our partner housing associations and local authorities, great news for the economy and great news for the thousands denied access to an affordable home.鈥�