The Housing Streamlined Subsidy Scheme: What Public Authorities Need To Know

Beatrice Wood, Oliver Slater and Melodi Mangan review the new housing streamlined subsidy scheme, which smooths the path for awards of up to £75m on relevant housing projects.

The Housing Streamlined Route

Streamlined routes are a type of subsidy scheme made by government for voluntary use by any UK public authority. This article explores the “Housing Streamlined Route”, a new route created on 14 April 2026, which enables public authorities to award subsidies to an enterprise for a single housing project up to a maximum of £75 million (subject to certain conditions).

Background

As outlined in previous articles, a subsidy is an economic advantage given to an enterprise by a public authority. To ensure transparency, reduce distortive effects on competition, and remain compliant with the UK’s international obligations, the Subsidy Control Act 2022 (the “Act”) governs the grant of subsidies.

 Under the Act, public authorities ordinarily have a duty to carry out an assessment against the subsidy control principle prior to subsidy award. Where streamlined routes apply, there is no need to carry out this assessment. There is also no need to refer a subsidy awarded under a streamlined route to the Subsidy Advice Unit at the Competition and Markets Authority (irrespective of value).

The Housing Streamlined Route

The Housing Streamlined Route aims to address viability gaps preventing the development of social and affordable housing and a wider mix of homes (including mixed‑tenure and market‑rate housing), and to speed up delivery so those homes are completed sooner than would otherwise be possible. The introduction of the new route seems tied to the urgent need for homes.

The route has two strands:

Strand 1

The objective of Strand 1 is to address viability gaps that prevent social and affordable housing from being developed or provided, and to expedite the delivery of this housing.

This strand is intended for use where financial support relates exclusively to the social and affordable housing component of a project, or where the project consists entirely of social and affordable housing.

Under this strand there are four categories of eligible costs:

• Acquisition (including costs to support the acquisition of land, site, existing buildings and / or interest in an entity for the provision of social and affordable housing).
• Works costs for new social and affordable housing.
• Works costs for existing buildings (including costs to support essential works costs for existing buildings, where such stock is being converted into social and affordable housing, or to mitigate the risk of social and affordable housing falling out of use due to deterioration).
• Support on costs for social/affordable housing (including legal fees/disbursements, accounting and tax advice and on-site surveys).

Public authorities should be aware that the subsidy amount cannot exceed the project’s “viability gap” as determined by the public authority, and that the maximum subsidy ratio under the strand is up to 80% of overall project costs.

Strand 2

The objective of Strand 2 is to address viability gaps that prevent a wider mix of housing from being developed or provided, and to expedite the delivery of these houses.

Under this strand there are three categories of eligible costs:

• Category 1 – acquisition (costs to support the acquisition of land, site, existing buildings and / or an interest in an entity for the provision of sites of any tenure mix).
• Category 2 – works costs for new housing stock (costs to support the works costs for new sites of any tenure mix). This includes works costs for associated infrastructure.
• Category 3 – on costs (costs to eligible enterprises to support on costs for sites of any tenure mix).

Again, the subsidy amount cannot exceed the project’s ‘viability gap’ as determined by the public authority, and the maximum subsidy ratio under the strand is up to 50% of overall project costs.

It is possible for an enterprise to be granted subsidies under both Strand 1 and Strand 2 for a housing project. The maximum amount that can be awarded a single project is £75 million. It is important to note that subsidies given under this route must not cause the maximum award amount or subsidy ratio to be exceeded on a cumulative basis. Public authorities must also meet the transparency requirements set out in the Act (necessitating the upload of relevant details to the subsidy database).

Implications

Where the conditions of this route are met, local authorities may benefit from the alleviation of administrative burdens.  Authorities may also benefit from the decreased risk of legal challenges being brought, given that under section 70(2) of the Act, the Competition Appeals Tribunal (“CAT”) has jurisdiction to review the making of the subsidy scheme (such as a streamlined route), but not later subsidies granted under it. While subsidies awarded outside of Streamlined Routes are susceptible to applications by “interested parties” for review by CAT, compliant use of a Streamlined Route decreases the risk of such an application.

However, it is important to note that any subsidies granted under this route are carefully checked to ensure that all conditions relating to eligibility, cost limits, and proportionality are met. As highlighted in Statutory Guidance relating to subsidy schemes or streamlined routes, “If a subsidy does not really fall under the scheme or route, then the public authority should have treated it as an individual subsidy, and therefore conducted an assessment against the relevant principles and prohibitions”.

As such, while the introduction of the new Scheme represents a positive step which will likely serve to support the housing market, local authorities should continue to be diligent in checking that all conditions are satisfied, seeking legal advice as needed.

Experts on Your Side

Sharpe Pritchard’s market-leading subsidy control team has a wealth of experience advising on the interpretation and application of subsidy control legislation and EU State aid rules. The team advises on the full range of subsidies, from minimal financial assistance awards to subsidies of particular interest considered by the SAU.

Beatrice Wood and Oliver Slater are Associates and Melodi Mangan is a Trainee Solicitor at Sharpe Pritchard LLP.

---

For further insight and resources on local government legal issues from Sharpe Pritchard, please visit the SharpeEdge page by clicking on the banner below.

 

 

Visit Sharpe Pritchard's new Building Safety Hub, focusing on The Building Safety Act 2022 and its wide-ranging impact.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email This email address is being protected from spambots. You need JavaScript enabled to view it..