Accessing public funds to boost housing developments may soon become easier. Following the introduction of two new streamlined routes for the award of subsidies in February 2026 (which we wrote about here), a further streamlined route has now been added by the Department of Business and Trade – the Housing Streamlined Subsidy Scheme (the “Housing Route”).
This brings the total number of streamlined subsidy schemes to six; in addition to the Housing Route, there are streamlined subsidy schemes available to public authorities providing financial support to businesses for Arts and Culture, Community and Regeneration, Research, Development and Innovation, Energy Usage and Local Growth purposes.
In this article, we consider the terms of the new Housing Route and its implications for public authorities and potential subsidy recipients.
Streamlined routes
A “streamlined subsidy scheme” or more commonly a “streamlined route” is one of several mechanisms that public authorities can use to lawfully award a subsidy under the Subsidy Control Act 2022 (“SCA”).
For most subsidies (other than those below certain value thresholds) a public authority will require to conduct an assessment to satisfy itself that the subsidy is consistent with the seven subsidy control principles contained within the SCA. This can be a complex and time-consuming process.
There is no requirement to carry out a principles assessment where a subsidy is given under a streamlined route, provided that the subsidy meets the eligibility requirements of the streamlined route, on the basis that the UK Government has determined that subsidies meeting those requirements pose a lower risk of distorting the market.
Since no assessment is required, such a subsidy is also not subject to any requirement to make a reference to the Competition and Markets Authority (“CMA”).
The effect of this is that if a subsidy is given in accordance with the terms and conditions of the streamlined route, it cannot be challenged as failing to comply with the SCA. Streamlined routes therefore offer an additional advantage to public authorities in that they reduce the potential grounds of challenge available in respect of a subsidy award (though general public law grounds of challenge can still be used).
Overview of the Housing Route
The Housing Route was made on 14 April 2026 and is available for use immediately from that date. Public authorities should note, however, that the Housing Route remains subject to Parliament’s veto for 40 days from that date. There is therefore a risk attached to any subsidies given under the Housing Route before that period has passed. Parliament is due to be prorogued ahead of the King’s Speech on 13 May and will be in recess from 21 May to 1 June, so this ‘risk period’ is likely to last until the middle of June 2026. Assuming no such vote to reject it takes place, the Housing Route will continue to operate until 13 April 2032.
The purpose of the Housing Route is to provide for subsidies falling within one of two “strands”:
- Strand 1 relates to gap funding for social and affordable housing, which is defined as “accommodation for rent or sale at below the market rate [i.e. below the prices or rents determined by the open market] that is made available in accordance with rules designed to ensure that it is made available to people whose needs are not adequately served by the commercial housing market”. The policy objective of this strand is to address viability gaps which prevent social and affordable housing from being developed or provided, and to expedite their delivery in order to complete them sooner than would otherwise be the case.
- Strand 2 relates to gap funding for “sites of any tenure mix”. A distinction is drawn by the Housing Route between “single-tenure” and “mixed-tenure” sites. A “single-tenure site” is a development comprising of one category of residential tenure. It follows that a “mixed-tenure site” is a development comprising of more than one category of residential tenure, and can include both non-social/affordable housing and ancillary or complementary non-residential uses (e.g. for commercial premises). Strand 2 can be used by public authorities in respect of either category of site. The policy objective of this strand is to address viability gaps which prevent a wider mix of housing from being developed or provided, and to expedite delivery of those homes sooner than would otherwise be possible.
Enterprises can receive subsidies under either or both strands of the Housing Route for housing projects in the UK, which are projects to deliver residential accommodation, by itself or as part of a wider project, and including associated infrastructure. They may be single or group site projects, or an individual phase or phases of a single site.
The maximum amount of subsidy that may be given to an enterprise in respect of a single project is £75 million. There is detailed provision within the Schedule to the Housing Route as to the specific eligible costs which may be funded in relation to each strand and maximum subsidy ratios (80% for Strand 1 projects, 50% for Strand 2 projects). However, for any eligible costs to be funded by a subsidy given under the Housing Route, those costs must be: (1) incurred directly as a result of the project or activity; and (2) strictly necessary for the housing project and limited to the project period. Any element of the project which does not constitute a subsidy should be excluded in calculating its value.
It should also be noted that cumulation rules apply to subsidies given under the Housing Route. Neither the maximum award of £75 million, nor maximum subsidy ratios, may be exceeded on a cumulative basis taking into account other subsidies awarded under the Housing Route within the same three-year period, and subsidy awards cannot be manipulated in order to avoid those rules. Subsidies that are given on another legal basis, for example as ‘standalone’ subsidies following a principles assessment, do not cumulate with those given under the Housing Route, but each subsidy will be relevant to the other’s assessment of what the viability gap actually is.
A broad range of enterprises are eligible to receive funding under the Housing Route. This includes housing developers, registered providers of social housing and registered social landlords, local authorities, public sector bodies with a housing delivery function, charities delivering housing or related services with government support and other housing providers or new entities established for the purpose of delivering housing.
Subsidies under the Housing Route can be given as grants, loans, equity, guarantees, exemptions from specified levies or any combination of those mechanisms.
Importantly, subsidies can only be given under the Housing Route to fund identified viability gaps and must be limited to the amount of that gap. A viability gap assessment will require to be carried out by either or both of the public authority and subsidy recipient, proportionate to the size and nature of the subsidy. In doing so, the public authority must consider the cumulative value of all subsidies (i.e. not just those given under the Housing Route) received by the enterprise for each housing project. The viability gap also cannot be attributable to any fault on the part of the subsidy recipient.
The Housing Route is also subject to a variety of more standard conditions, including the general prohibitions applicable to subsidies contained in sections 15 to 29 of the SCA. There are also provisions about information sharing relating to the project, transparency and circumstances where subsidy funds can be recovered.
Implications
As with the other streamlined routes, the Housing Route is intended to make the award of low-risk subsidies an easier and more efficient process for public authorities, in light of the reduced likelihood of distortive effect on the market in the area of social and affordable housing.
The new Housing Route is likely to be particularly useful for local authorities seeking to deliver social and affordable housing projects, particularly as subsidies in this area prior to the introduction of the Housing Route were very likely to exceed the threshold to be provided as Minimal Financial Assistance (effectively “de minimis” subsidies under the SCA) and would therefore almost always have required the satisfactory completion of a subsidy control principles assessment. The Housing Route presents an opportunity to significantly lessen that administrative burden. The maximum subsidy value of £75m hugely exceeds even the £12m set out in the recently published community and regeneration streamlined route.
It will, however, be important for public authorities to ensure that any subsidy given under the Housing Route, or any streamlined route, is compliant with its terms and conditions and therefore properly given under the route. In particular this will include proper assessment of viability gaps. A failure to do so could pose a risk of challenge to the award of the subsidy which, if successful, could result in the recipient being ordered to return the subsidy to the public authority.
If you would like to discuss how the introduction of the new Housing Route affects your organisation, or the law regulating subsidy control more broadly, please contact Jamie Dunne, Charles Livingstone, or your usual Brodies contact.
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