Debate contribution: Social Housing: Funding

Debate contribution by Mr Gordon Lyons on 18 November 2025.

MLA

Mr Gordon Lyons

Party at the time

Democratic Unionist Party

Date

18 November 2025

Type

Debate contribution (made as a minister)

Business

Ministerial Statements

Heading

Social Housing: Funding

Assembly identifier

Official Report component 5244046

Read the official Assembly record

Text

I wish to make a statement to the Assembly on the funding and development of new social homes across Northern Ireland. I begin by recognising the efforts of our key partners in delivering new social homes via the new-build programme in times of constraint and uncertainty. The solid partnership arrangements between my Department, the Northern Ireland Housing Executive (NIHE) and housing associations ensure that there is a steady and increasing supply of new social homes for people on the waiting list. I am grateful for their steadfast commitment to delivering the programme. However, the Department and the sector face many challenges in relation to the budget required to support that work. Despite my efforts to secure an adequate budget allocation to meet the need for new social homes and my intention to continue to maximise delivery, I, along with the sector, have not received sufficient capital allocations in any budget rounds. Every party in the Chamber talks of their passion for housing and support for more social homes. At the Executive, we agreed a housing supply strategy with clear targets for housebuilding. In the Programme for Government (PFG), one of the few targets agreed was on social housing, yet I continue to receive insufficient capital funding. I cannot be the only one to make the case for housing. Today, I have taken the decision to review the funding allocation to housing associations to ensure that we get the most out of every pound that we spend. This is an opportunity to look at the programme afresh and identify opportunities to be creative. We need to do more with less, collectively working to address the barriers to finance and social housing supply. I met the Northern Ireland Federation of Housing Associations (NIFHA), housing association representatives and the Northern Ireland Housing Executive in late October to give them advance notice of the changes that I have announced. At that meeting, I advised the sector of the new indicative costs and grant rates for new build social homes that will be effective from 1 December 2025 to the end of March 2027. New social homes are funded through a combination of grant from my Department and borrowing by the developing housing association, creating a match funding-style arrangement that gives value for the public money invested. Following careful consideration, I have decided to increase the benchmark costs — the assumed cost of building a new social home — by 13·7%, from an average of £181,164 to an average of £206,100. That reflects the increased costs to the sector due to inflationary increases, new building regulations and increases in Northern Ireland Electricity (NIE) connection charges, among other things. It is an acknowledgement that relevant costs have increased since the benchmark costs and grant rates were last changed, in 2023. However, while construction costs have increased, rents have also increased. As a result and in the interest of securing the maximum possible number of new social homes from the Department's budget, the proportion of grant paid by the Department for Communities for new social housing starts will decrease from an average of 54·2% to an average of 46·52%. To give certainty to the sector, those new benchmark costs and grant rates will be kept in place until the end of the 2026-27 financial year, unless there are very exceptional circumstances that require a change to the rates. I have set out to the housing association sector my expectation that it, like the public sector, must deliver in challenging financial circumstances and strive for efficiencies. It will be for each individual housing association to decide how much private finance it can borrow and how much risk it can take on. The impact of that will be to make my budget allocation stretch further and enable us to build more homes with the funding that is available. I am asking housing associations to do more: drive innovation, find efficiencies and increase private financing to make up the small shortfall. However, let me be clear: I am not cutting funding to the programme. I am making changes to ensure that the £177·5 million allocated from my budget that will be spent this year on new social homes and the funds spent next year go as far as possible. Every new home matters. I have listened to the housing association sector. That is why I have also announced reviews, which have been called for by the associations, of how we subsidise new-build social housing and the standards to which that housing is built. Our ambition is that at least some of the value-increasing measures that those reviews propose may be introduced to the development programme in the next financial year and that all the reviews are completed by September 2026. Achieving the Programme for Government target of 5,850 social housing starts within this mandate will be extremely challenging, given the constrained budgets. Changes must be made. We must achieve more with less. I am fully committed to delivering on the PFG target and realising the longer-term ambition of the housing supply strategy to deliver at least 100,000 homes, of which one third will be social. Achieving those will require innovation and creativity and, ultimately, at the outset, adequate funding allocations. Earlier this year, I chaired a housing round-table meeting that brought together key stakeholders to share knowledge on how to increase social housing delivery in the current challenging environment. My officials are taking forward work with the Northern Ireland Housing Executive and the wider sector on proposals aimed at increasing or improving delivery of the new-build programme in future years. As previously advised, I am bringing a proposal to the Executive to make better use of public land in a way that can act in lieu of grant and support the delivery of more affordable homes. We must maximise supply with the resources that we have. The whole-system issues, such as waste water capacity, planning and land availability, must be addressed to unlock the homes that we need. My housing supply strategy provides the framework for how we can do that, and, collectively, the Executive have committed to it. The quality of actions to implement it will determine our success in delivering the strategy vision. I require an action plan that demonstrates real intent to remove barriers. Therefore, as it moves closer to being finalised, I have written to my ministerial colleagues to challenge them to propose actions that will genuinely deliver progress in meeting the significant challenges that we face.

I have also written to the other Ministers in the Executive to seek their support for a sufficient budget allocation to the social housing development programme to enable delivery against our commitments. I unashamedly make that case again today.

I can assure the House that I am committed to delivering value for money in the social housing development programme and to doing everything in my power to ensure that a sufficient budget allocation is made to enable delivery of our PFG target. However, the House should take note that I am not prepared to keep doing things the way that we have always done them. I will always seek to be innovative and to try new things to maximise delivery. That is what I have been doing since I took up post. I have used more financial transactions capital (FTC) for homes with cheaper rents; used the Northern Ireland Housing Executive's reserves to reduce temporary accommodation costs; done away with intimidation points to create a level playing field; and found new ways to subsidise public housing. Those are changes that we needed, and I will continue to bring in changes so that we can deliver more for the people of Northern Ireland. I have played my part. Now it is time for the House and my Executive colleagues to rise to the challenge and take the decisive action that is needed to ensure that our shared ambition truly meets the needs of the people of Northern Ireland. I commend the statement to the House.

Rents have already gone up, which is one of the reasons why I am taking action today. Ultimately, success will be measured by the number of additional homes that would not otherwise have been delivered if we had stuck with the status quo. I am not cutting the funding for housing associations.

The Member has already has his opportunity to ask the question. I am not cutting the money that is going to housing associations; the £177·5 million is still there. I am cutting the amount per unit, so that other sources of private funding can be looked at. The Member seems to be annoyed about what I am doing, but it is quite clear that if I stuck with the status quo, not only would we not be building more homes, we would be building fewer homes because the costs have gone up. Those costs cannot be left in their entirety for the Department to shoulder. What I am proposing is fair and will enable more homes to be built and more investment in public housing.

I am confident that the borrowing capacity exists for housing associations to continue doing their work and, through the changes, make sure that we are building more homes. It is right that we share the burden, and I commend housing associations for the work that they have done, often in challenging circumstances. However, we all need to do more, which is why I have asked housing associations to shoulder more as we move forward. Of course, in return, there will be additional benefits for them. We are looking more widely at the design guides, including Secured by Design, and are providing housing associations with the stability of knowing what is coming. Altogether, there is a package of measures that, along with the changes that I have outlined, will have a net benefit and allow us to build more social homes, which is what it is all about. We have a target, and I am determined that we do everything in our power to meet it. Some of that is outside my control, but I will play my part, and today is another example of how I am working to achieve that.

There is huge value from homebuilding for those who get the houses. That is why I have placed such emphasis on making sure that we have houses. I have said time and again in the Chamber that someone having a safe and warm home in which to live and grow up helps their life chances, and it takes pressure off other Departments. Huge economic value also comes from housebuilding in Northern Ireland. In 2024-25, the estimated economic impact of the social housing development programme was over £1 billion. It needs to be kept in mind that we are not just providing additional homes for people but creating economic benefit.

The new rate will take effect from 1 December, so it will not affect houses that are already under construction or that begin construction before that date. Yes, the housing associations have the capacity. The borrowing facility is there, and the banks are satisfied that they will be able to provide the money. The Member talks about risk, but the bigger risk is in doing nothing, because that will result in fewer homes being built. Time and again in the House, Members call for action — for things to happen — and action is what I am taking today. I am taking action to make sure that we build more social homes.

I am happy to confirm that there is, as the Member would expect, regular engagement with housing associations. We hold quarterly meetings at official level, and I meet housing associations individually and collectively. The matter has been on the radar, and the housing associations have for some time been aware of the options that were in front of me. I met them a few weeks ago to outline the rationale behind what I am doing and the justification for it. I will continue to work with them. It will ultimately be for them to decide where they put their funding and where they build. They have the capacity to do that, however. The private finance is available that will allow us to do what this is ultimately all about, which is building more social homes.

I have been engaging with the Department of Finance on the matter. It is complex, but we are getting to a good spot. I have not been directly involved in identifying such land, but the Housing Executive has some information. Moreover, the Department of Finance and, in particular, Land and Property Services (LPS) have information about where that land would be. As time goes on, we will be able to identify land that would make good sites for social housing. Ultimately, we need public subsidy in order to build social housing. If Executive colleagues say that they do not have any capital or cannot give up any in order for us to build, I will lean on them and say, "There's a site that you have" or, "Here's another way in which you can help". We will explore every option, as we are not yet at the stage of identifying sites, but that new and innovative way of doing things could go a long way to contributing to the proportion of the cost that would fall to government. It will enable us to build more homes. That is being discussed, and I hope that it can be progressed soon.

If we had maintained the grant rate where it was, we would be building fewer homes, and that would not be good value for money. That is why we have brought forward these measures today. Maintaining the grant rate would have meant fewer homes. The changes mean that we will not only keep up with what we have done in the past but be able to build more homes. We are also looking at the design guides and standards. That is important. Housing associations have told me that the guides require many things that are not really necessary or value for money. That is why I want to work with them. If they say that they can build more homes at better value and that not all homes need to be built to the same specification, I want to help them with that. I am not always looking for more money; I am also looking for ways in which we can reduce costs. That is why today's announcement is so important.

It is complex. In essence, there are total cost indicators (TCIs) and the housing association grant (HAG). The HAG reflects the uplifts that are identified by the Central Procurement Directorate's housing advisory unit. The HAG rate reflects the 30th percentile of rents and the average borrowing rate of 3·5%. Those are the benchmarks that are used to determine what is required, taking rental figures into consideration. I am happy to provide the Member with more detailed information on that. It is not straightforward for those who are not involved in it every day, but it can be clearly set out. I will be happy to provide that to the Member, as I will to the Committee. I will perhaps also put it in the Assembly Library.

Yes. I do not intend to change the energy efficiency standards of social homes. We want to make sure that our homes are as energy efficient as possible. However, some additional measures have been put in, for example, around lifetime homes. I want to make sure that we have provision for disabled people in Northern Ireland, but it does not make sense to ensure that every home is built to that standard when doing so could add considerable cost to a home that, over its lifetime, may never be used for that purpose. We need to be smarter in how we build our homes and how we allocate them. If we can build more homes that are appropriate for people, we should do so, rather than have a one-size-fits-all model that ends up being more expensive. I absolutely believe that we should have homes that can be adapted and used for people who have additional needs, but there is no point in building them all to that standard if doing so results in fewer homes overall.

The Finance Minister has just walked in. He could answer that question as well.

He will be able to confirm that, at every possible opportunity, I have bid for the capital that I have required to build homes.

I will continue to do that. Last year, we bid for £230 million, and, in total, we have received £177·5 million with, I hope, some additional money to come this year in monitoring rounds.

Ultimately, however, we need to make sure that we meet our targets. The Programme for Government had a clear target for housing. The actions that I am taking today are my attempt to make sure that we do everything that we can to increase the number of builds with the money that we have. We need more money, however. We need to increase that in order for us to meet that target. I have no doubt that the Finance Minister wants to make sure that we meet our social housing targets. The sector is watching, as are the construction industry and, most important, our constituents, so we need to make sure that a Budget is brought forward that gives us the capital that we need so that we can meet our targets. This is not just about somebody having a home but about all the other things that come from that. I have spoken in the House again and again about the importance of housing and how a good, warm home can take pressures off elsewhere. We need to realise not just that this is about helping people to find somewhere to live but that it is an investment, so we need the money for that.

3,009 words. Text as published by the Northern Ireland Assembly.

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Assessed 21 October 2026 at 16:52 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9. The text was identical to an already-assessed record, so the same answers were reused.

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