The UK Government published a new Housing Streamlined Subsidy Scheme (the “Housing Scheme”), otherwise known as the “Housing Streamlined Route”, on 14 April 2026. Separate guidance on the use of the Housing Scheme has now also been published. The Housing Scheme provides a new subsidy exemption option for public authorities awarding subsidies for the building and delivery of housing (including social and affordable housing) up to a maximum subsidy value of £75m, plus other limitations linked (in the case of mixed tenure projects at least) to not exceeding a reasonably demonstrated viability gap and being no more than 50% of total eligible costs.
In so doing the Government has very significantly (and for the first time) set a maximum subsidy limit in a streamlined route which exceeds the general mandatory referral threshold (£25m) above which a subsidy would otherwise have to be referred to the Competition & Markets Authority (“CMA”) for a non-binding opinion before it could be awarded. This means that large value subsidies to major new housing projects may be completed faster and without that extra layer of public scrutiny, provided they can be sure to have satisfied all relevant conditions in the Housing Scheme. If nothing else it is hoped that this will speed up delivery of major new housing projects, this being something the Government has made a strategic priority for the current Parliament.
This article sets out the key requirements for safe and effective use of the Housing Scheme and the practical value that public authorities can gain when using the Housing Scheme when measured against alternative subsidy exemption options.
What has happened?
The UK Government has introduced a new Streamlined Subsidy Scheme specifically for housing projects. The Housing Scheme was made on 14 April 2026 and may be used by any UK public authority to award subsidies until 13 April 2032. It is intended to play a role in accelerating housing delivery at a time of significant pressure on housing supply and resulting social need, particularly in respect of social and affordable housing.
This follows hot on the heels of another two new Streamlined Subsidy Schemes, for Arts & Culture and Community & Regeneration respectively, from January 2026, as per DWF’s previous update on those. This has doubled the number of streamlined subsidy schemes in operation and thereby arguably signifies something of a shift in approach since the Subsidy Control Act 2022 (the “Act”) entered into force now nearly three and a half years ago. We note that the Community & Regeneration Streamlined Subsidy Scheme also offers the potential to cover housing projects but within a maximum subsidy total of £12m. The Housing Scheme therefore offers a streamlined subsidy scheme alternative to that with a very much higher (£75m) ceiling.
What are Streamlined Subsidy Schemes?
Streamlined subsidy schemes (streamlined routes) are specific subsidy exemption routes for designated types of economic activity which set out a series of terms and conditions which if all are duly satisfied (and none contradicted), a public authority can be satisfied of full subsidy exemption cover and proceed to award the subsidy. To this extent a streamlined subsidy scheme mirrors the effect of a Block Exemption Regulation in EU State aid law.
Satisfying the terms of a streamlined subsidy scheme thereby allows public authorities to proceed with the relevant subsidy award without needing to consider the default subsidy exemption route of applying the Subsidy Control Principles (the “Principles”) from Schedule 1 of the Act. Awards made within the terms of a streamlined subsidy scheme are also not subject to mandatory referral to the CMA before they may be awarded, even if they would otherwise cross the mandatory referral threshold (now stood at £25m for non-sensitive sectors such as housing). This latter point is especially significant in the case of the Housing Scheme given the high maximum subsidy value it provides, and noting that the maximum subsidy value thresholds in previous streamlined subsidy schemes have all stood far short of the CMA referral threshold.
However it must be emphasised that safe use of a Streamlined Subsidy Scheme requires all relevant conditions to be seen to be observed. This article sets out the key requirements for safe and effective use and the practical value in doing so as against alternative means.
What does the Housing Streamlined Subsidy Scheme provide for?
The Housing Scheme is focused on facilitating the delivery of new housing projects (including social housing) notwithstanding the viability gaps so often presented, particularly in brownfield and urban locations where demand is highest. This is based on a pre-determined government view that this is important for the economy and the people of the UK, and that any distortions of competition that may emerge from subsidising the delivery of new housing are (in effect) justified for the greater good provided this is done within carefully pre-determined parameters, hence the terms and conditions set out in the Housing Scheme, eg. limiting subsidy to demonstrated viability gap.
Two strands of support
The Housing Scheme is divided into two distinct “Strands”, each with a specific policy objective and set of rules.
Strand 1: Social and Affordable Housing
Strand 1 is designed for projects consisting entirely of social and affordable housing, or where financial support is exclusively directed at the social and affordable component of a wider scheme. Its objective is to remove viability barriers and expedite the delivery of new homes that are not adequately provided by the market and the provision of existing homes as social and affordable (i.e. below market rent).
Under this strand, subsidies are limited to the assessed viability gap and subject to a maximum subsidy ratio of up to 80% of overall project costs, with a single-project cap of £75 million, subject to cumulation rules. Funding provided under this strand must be strictly limited to the costs of delivery of social and affordable housing.
Strand 2: Sites of any Tenure Mix
Strand 2 applies to housing developments featuring a mix of tenures, which may include market‑rate housing, or housing projects with ancillary or complementary non‑residential uses. This strand recognises that mixed‑tenure schemes can also face viability challenges that prevent, delay or otherwise inhibit delivery.
For Strand 2 projects, the subsidy must again be limited to the assessed viability gap, but a lower maximum subsidy ratio of up to 50% of the overall project costs applies, alongside the same £75 million maximum subsidy cap (ie. housing subsidies in excess of this will not have the benefit of the Housing Scheme and will need to progress via individual assessment of the Principles and CMA referral as before).
Eligible costs and conditions
The Housing Scheme sets out a defined list of eligible costs per Strand above, including site acquisition, works costs for new housing, conversion of existing buildings into housing, and certain on‑costs such as professional fees. Eligible costs must be incurred directly as a result of the project and be strictly necessary to achieve its delivery.
Public authorities seeking to utilise the Housing Scheme must also comply with a number of general conditions, including requirements around the submission of a subsidy application from the beneficiary with certain minimum details, a requirement that eligible costs considered should be limited to those strictly necessary for the project, and a series of minimum requirements for the legal agreement by which the subsidy will be conveyed (typically a grant funding agreement). The Housing Scheme does not require that subsidies delivered under its cover would all necessarily be given by grant, thus opening the door for subsidy to be given alternatively by way of sub-commercial loan or other financial instrument in which the subsidy element of a particular funding package is likely to be materially less than the capital value thereof.
The Housing Scheme includes requirements to cumulate other subsidies to the same beneficiary and project within the current and past two financial years in order not to circumvent the £75m maximum subsidy value, and in any event other public contributions to subsidised projects will always need to be taken into account.
Lastly, a public authority making use of the Housing Scheme must publish a relevant notice in the national subsidy database after relevant subsidies have been given so that interested parties and the market may be duly informed. In the event that a subsidy given under the Housing Scheme would be challenged, the scope of that challenge is likely to turn on whether all relevant terms and conditions of the Housing Scheme had been duly satisfied or not.
What are the advantages for public authorities?
The principal benefits of the Housing Scheme are speed (especially in a case that would otherwise need to be referred to the CMA) and certainty, the latter point being in contrast to the Principles. The Housing Scheme sets a series of relatively precise terms and conditions which will normally either be clearly satisfied, or they won’t. The Principles on the other hand set a series of more vague concepts which although more flexible, can be harder to be sure of having properly satisfied (although the recent Cardiff Airport case has offered helpful clarity to the standard of assessment of the Principles). The Housing Scheme therefore offers public authorities an ability to work against a series of more precise conditions in order to be clearer on compliance.
The Housing Scheme includes several conditions which may be considered closely akin to what a Principles analysis would entail but notably does not include anything akin to Principle F which requires an authority to consider effects on competition and how to ensure the same are minimised. This will be welcomed by many authorities as among the hardest of the Principles to be sure of covering properly. One point of a streamlined subsidy scheme is to say the Government has already assessed that in a national context, and is effectively happy to consider all subsidies within the parameters set out as being within a level of distortion of competition that is considered a necessary and appropriate trade-off to the social or economic benefits to be achieved and so acceptable for the common good.
Nevertheless, in order to be sure of effective cover the Housing Scheme does still require an authority to check a series of different points in order to be sure there is no impediment to reliance on it for subsidy exemption cover. There are many elements of this that are similar to considering the Principles, but the really big difference in practice and procedure is the maximum subsidy figure (of £75m), from which the Housing Scheme’s enables major subsidy values up to £75m without a CMA referral (as would otherwise bite at £25m+).
How can public authorities rely on the Housing Scheme for future use?
Public authorities seeking to use the Housing Scheme must ensure that the subsidy clearly falls within one of the two Strands summarised above. It must then be sure that all the general conditions of the Housing Scheme are satisfied and all conditions of the respective Strand relied on are satisfied. This includes matching the instrument by which the subsidy is to be conveyed (e.g. grant funding agreement) to certain stipulations set out in the Housing Scheme. The public authority concerned must then conclude the matter with a relevant national subsidy database entry once the subsidy has been given.
The above lends itself to a checklist approach as against all the terms and conditions of the Housing Scheme, which should be retained as contemporaneous evidence of the relevant conditions having been satisfied at the time the subsidy is given. Such an approach should provide the best protection in the event of challenge in the future.
Commentary
The Housing Scheme offers a useful further alternative to public authorities seeking to award subsidies to make possible and/or accelerate housing projects in their areas. This was possible before but the Housing Scheme offers an additional and arguably easier (or at least more certain) route for most situations.
Where the Housing Scheme will make the biggest difference is in the highest value subsidies to new housing projects (especially in London) where the £25m CMA referral threshold would otherwise have applied and where now it need not, up to a maximum subsidy value of £75m. This is expected to cover most housing projects envisaged.
One further consequence of the Housing Scheme is it is likely to reduce the premium on public authorities adopting their own individual subsidy schemes for the delivery of new housing. This had been considered especially valuable if delivered through a CMA referral of the individual scheme, on the basis having such a scheme to rely on enabled the authorities concerned not to have to refer to the CMA future (individual) subsidies that would otherwise trigger such a requirement. This is not to say that individual subsidy schemes for housing projects will not remain a potentially useful option for different authorities should they wish (especially if they would consider the Housing Scheme at all difficult), and it is also true that all public authorities remain entirely free to continue to deploy the Principles for any given housing project should they wish. Just because the Housing Scheme now exists does not mean it must be used whenever a housing subsidy is given.
Overall then, the new Housing Scheme is a positive development and useful addition to the menu of subsidy exemption routes available. Whether it signals a further shift generally to more effective and wholesale use of streamlined subsidy schemes rather than the Principles (which the previous Government had been at pains to stress it did not intend to do) shall remain to be seen.
DWF has vast experience of advising on all aspects of Subsidy Control and State aid law, and related grant funding programmes and agreements. If you are unsure about any element of compliance or best practice, we are on hand to help.
Contributing author: Eirini Sakellari
