The financial outlook for councils’ social housing budgets has improved compared with last year, but significant pressures remain that could limit housebuilding, an LGA survey has found.
The poll of council chief financial officers in England found 46 per cent were likely to need to draw on reserves to balance their housing revenue accounts (HRAs) in 2026/27, down from 72 per cent last year.
Confidence in balancing HRA budgets has also increased, with 71 per cent confident of doing so, compared with 61 per cent in 2025/26.
Meanwhile, 61 per cent said they felt able to maintain and repair existing housing stock, up from 52 per cent last year.
However, financial pressures remain acute.
Just less than half (44 per cent) of councils said pressures on their HRA would affect how much they can invest in building new homes.
Nearly all councils (99 per cent) expect to raise rents within permitted limits – and almost two-fifths (39 per cent) do not feel able to maintain existing housing stock to the required standard.
The Government has announced a 10-year social housing rent settlement from 2026/27, alongside plans to introduce rent convergence from 2027/28.
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.
“That nearly half say that pressures on their social housing budget will impact their ability to build more new homes is concerning.”