The overall financial picture for social housing is showing signs of improvement, but more support for councils is sorely needed to help alleviate pressure on their Housing Revenue Accounts (HRA), a Local Government Association survey reveals.
The survey, sent to councils to assess their financial stability, found the number of councils who said they’d need to draw on reserves fell to 46 per cent down from 72 per cent last year.
More respondents said they were confident of balancing their HRA budgets, with 71 per cent saying so this year compared to 61 per cent in 2025/26.
The number who said they felt confident they’d be able to maintain and repair existing housing stock rose to 61 per cent this year, compared to 52 per cent in 2025/26.
However, despite the trend being positive, significant challenges remain for HRAs, which will impact housebuilding and cost to tenants.
Just under half (44 per cent) of councils say that financial pressures on their HRA will impact the amount they can invest in building new homes, and nearly all councils said they planned to raise rents (99 per cent down from 100 per cent).
And while it is positive that more councils can invest in their existing stock, it remains concerning that nearly two-fifths (39 per cent) still don’t feel able to maintain existing housing stock, despite providing good quality housing being a priority for councils.
From the 2026/27 financial year, the Government is bringing in a 10-year social housing rent settlement of the consumer price index (CPI) plus 1 per cent. The Government has also confirmed rent convergence will be implemented at £1 per week from the 2027/28 financial year, rising to £2 per week from 2028/29.
While the phasing of its implementation may impact the delivery of some new homes in the short term, measures such as Minimum Energy Efficiency Standard (MEES) and the Decent Homes Standard (DHS) will give councils greater certainty and confidence to invest in the long term.
Cllr Tom Hunt, Chair of the LGA’s Inclusive Growth Committee, said: “It’s good news that the outlook on social housing finance has improved for councils since last year. New measures like a 10-year rent settlement and rent convergence, that councils have long called for, are important steps forward but local government still faces significant challenges.
“That nearly half say that pressures on their social housing budget will impact their ability to build more new homes is concerning.
“For the government to meet its ambition of 1.5 million homes, sufficient social housing supply is a key part of building the homes that our communities need. Supporting councils with the resources that they need to build, both financial and non-financial, will be crucial.”
Notes to Editors
The online survey was sent to all chief financial officers of English LGA member councils and was open between 17 December 2025 and 16 January 2026. A total of 154 councils responded to the survey, of which 72 said they had a HRA.
Research table:
| In order to set a balanced budget for your HRA for the 2026/27 financial year, how likely is it or not that your council will need to take the following actions? | ||
| Likely or Very likely (2026/27) | Likely or Very likely (2025/26) | |
| Raising rents (within allowable limits) | 99% | 100% |
| Reducing the revenue costs of your current HRA capital programme for existing stock (e.g. by reducing capital expenditure financed by the revenue account (CERA) or delaying/reducing borrowing) | 49% | 67% |
| Drawing down on reserves | 46% | 72% |
| Reducing the revenue costs of your current HRA capital programme for new builds (e.g. by reducing capital expenditure financed by the revenue account (CERA) or delaying/reducing borrowing) | 44% | 60% |
| Reducing real terms spending on supervision and management (such as managing tenancies, right to buy administration and rent collection, recovery and accounting) | 38% | 67% |
| Reducing real terms spending on repairs and maintenance | 35% | 57% |
| From the 2026/27 financial year, the Government is bringing in a 10-year social housing rent settlement of the consumer price index (CPI) plus 1 per cent. | ||
| Likely or Very likely (2026/27) | Likely or Very likely (2025/26) | |
| Balance the HRA budget annually | 71% | 61% |
| Maintain supervision and managements services to the necessary level (revenue spend) | 71% | 60% |
| Maintain HRA reserves at a prudent level | 69% | 55% |
| Repair and maintain existing stock to the necessary standards (revenue spend) | 61% | 52% |
| Invest in existing stock to ensure it meets necessary standards (capital programme) | 58% | 53% |
| Invest in planned new build programmes (capital programmes) | 43% | 38% |