New Housing Streamlined Subsidy Scheme and the viability gap
Subsidy Control Act 2022 Streamlined Route
The government has created a new Subsidy Control Act 2022 Streamlined Route for public sector subsidy awards to affordable housing bodies. This new subsidy scheme may be used by any public authority to give subsidies on or after 14 April 2026 1 until 13 April 2032. The new subsidy scheme potentially impacts on the procedure a public body uses to identify the value of the subsidy award. Any public body looking to use this new route will need to review and comply with the scheme requirements when making a subsidy award under this scheme.
This new streamlined route identifies a list of general conditions in applying a viability gap assessment including information which must be confirmed prior to the subsidy award and clauses to be included in the legal agreement granting the subsidy. The UK Government has also published Guidance to assist public authorities planning or awarding subsides under the route.
The “Housing Streamlined Subsidy Scheme”
Referred to as the “Housing Streamlined Subsidy Scheme”, the subsidy awarded must only be used to fund identified ‘viability gap’ funding for Social and Affordable Housing (Strand 1) and Sites of Any Tenure Mix (Strand 2).
Key considerations
- Applies to Eligible Costs with a single project limit of £75m (subject to cumulation rules)
- Specific list of eligible enterprises
- Additional rules relating to cumulation of successive subsidy awards also apply
- Each Strand has a policy objective linked to expediting delivery so homes are completed sooner than would otherwise be possible
Strand 1
- Exclusively social and affordable housing
- Calculation of the subsidy is limited to the assessed ‘viability gap’ and a maximum subsidy ratio of up to 80% of overall project costs
Strand 2
- Mixed sites featuring non-social and affordable housing or entirely market-rate housing sites or housing projects with ancillary or complementary non-residential uses e.g. commercial premises
- Calculation of the subsidy is limited to the assessed ‘viability gap’ and a maximum subsidy ratio of up to 50% of overall project costs
Specific list of Eligible Costs covering:
- Site acquisition
- Works costs for new social and affordable housing
- Existing building conversion into social and affordable housing, or
mitigating the risk of existing social and affordable housing falling out of use due to deterioration; and - On-costs
1 Paper to lie before both Houses of Parliament for a period of 40 days, during which time either House may resolve that the scheme be not approved.
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Contact our Public Sector team
Public authorities making subsidy awards for housing projects in their area may wish to review existing subsidy award procedures and consider following the viability gap assessment, so they can take advantage of the new Housing Streamlined Subsidy Scheme.
To discuss how Subsidy Control Act 2022: Streamlined routes might affect your organisation, or to review your grant-making processes, contact our Public Sector team or sign up for updates.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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