The changes will update costs and the proportion of grant paid since the rate was last changed in 2023.
A number of changes have been announced to increase the delivery of new social homes across Northern Ireland.
Communities Minister Gordon Lyons has confirmed an update to the amount housing associations will receive to construct new homes, following a meeting with the Northern Ireland Federation of Housing Associations (NIFHA) and representatives of its members.
The Minister confirmed that, 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. For the same purpose the Minister has also announced reviews of this grant and the design standards to which new social homes are built.
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Minister Lyons said: “Given the challenging financial context, I have made it clear that we must take an innovative approach to the funding of social homes. I remain committed to bringing forward proposals on how we can build more homes with the budget available.
“These changes will achieve better value and more social homes for those who need them from the budget that my Department provides towards new social housing, a budget of over £177.5 million in this financial year.”
The changes will update costs and the proportion of grant paid since the rate was last changed in 2023. To provide certainty and stability to Housing Associations, the changes will govern the Department’s support for social housing new build from 1 December 2025 until the end of the 2026/27 financial year.
The changes take account of construction costs, inflation, rent levels and interest rates. As a result of the changes announced, the grant provided to Housing Association to enable it to start building a new social home will on average reduce from 54% of the total cost to 46%.
The Minister also highlighted how the use of Financial Transaction Capital (FTC) mechanisms could enable housing associations to access finance at a lower cost. Proposals for the use of government land for building are under consideration and would reduce the cost of new social homes.
Minister Lyons added: “ Achieving the Programme for Government target of 5,850 social housing starts within this mandate will be extremely challenging given the constrained budget. Changes must be made; we must achieve more, for less.
“I am grateful to the Housing Associations for working in partnership with my Department and the Housing Executive to deliver the new build programme. I am confident that housing associations will continue to meet these challenging targets and to deliver for those most in need.”
In response to the announcement from the Communities Minister, Seamus Leheny, CEO, NIFHA, said, “The changes announced by the Department on the Housing Association Grant rates represent a significant shift in how new social and affordable homes will be funded. Under the new model, the average level of public funding support will fall from around 54% to approximately 46%, with some areas – including Belfast – expected to receive even lower rates.
“Housing associations have long delivered new homes by combining public grant funding with private finance, a model that has proven highly effective and efficient over many years. However, these reductions raise real concerns about the future viability of many projects currently in development or close to commencement, particularly in areas of highest housing need.
“These changes have been developed without detailed consultation with the housing association sector, and as a result, their full impact has not been properly assessed. With the new grant rates due to take effect from 1 December, there is a real risk that key projects could be delayed or cancelled, especially in places like Belfast where demand is greatest. Housing Associations will now have to re-evaluate if and how many projects can progress in the short term.
“NIFHA urges the Department to engage urgently with the sector to ensure that these changes do not undermine the delivery of much-needed new homes across Northern Ireland.”
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