Assessment under the UK Subsidy Control Act 2022 can cause significant delays to project development, especially where projects involve large public awards that must be referred to the Competition and Markets Authority (CMA) for review. As part of its plans to support the construction of new homes, the Government has now brought in a new streamlined route for housing, intended to remove some of these regulatory hurdles.

The new ‘Housing Streamlined Route‘ (or, ‘Housing Streamlined Subsidy Scheme’)took effect from 14 April 2026 and will remain in place until 13 April 2032. In this article, we explore:

• What the Housing Streamlined Route is;
• What types of subsidy are covered;
• What conditions must be met to fall within the streamlined route; and
• What this new regime may mean for businesses operating in this sector.

What is the Housing Streamlined Route?

The Housing Streamlined Route is the third streamlined route launched by the UK Government this year. Streamlined routes provide exemptions from the usual application of the UK Subsidy Control Act 2022 (the Act) for certain categories of subsidies, usually in areas that promote the UK Government’s strategic policy objectives.

Under the new housing route, where a housing subsidy that satisfies all relevant conditions is granted in the UK after 14 April 2026, it will automatically be deemed compliant with the subsidy control principles set out in the Act. It therefore won’t be necessary for the public authority granting the subsidy to carry out an individual assessment for the funding, nor to refer the subsidy to the CMA as a ‘Subsidy of Particular Interest’.

Which kinds of subsidy are covered by the Housing Streamlined Route?

The Housing Streamlined Route covers subsidies for ‘gap funding’ that fall within one of two strands (explained below). It covers up to a maximum of £75 million per enterprise, per project, across both strands combined. Only costs which are strictly necessary for, and limited to the period of, the project may be funded.

Strand 1: Gap Funding for Social and Affordable Housing

Under strand 1, a subsidy can be awarded to an eligible enterprise to support:

• the acquisition of land, site, existing buildings and / or interest in an entity for the provision of social and affordable housing,
• the works costs for new social and affordable housing,
• essential works costs for derelict 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 and
• costs for social and affordable housing.

Eligible costs under strand 1 include:

• the purchase price of land, sites, buildings or business interests (including shares or partnership interests), related transaction taxes, legal and professional fees, and any irrecoverable VAT;
• costs associated with major construction and site development works, remediation and abnormal costs, heritage retention, statutory and compliance‑driven works, on‑site and off‑site infrastructure and placemaking and community facilities, and any irrecoverable VAT;
• costs in relation to structural repairs, service replacements, energy‑efficiency measures, legal compliance‑driven works and tenant re-housing, and any irrecoverable VAT; and
• professional and advisory fees, surveys, monitoring, planning and building control costs, fees associated with compliance, financing and borrowing charges, insurance and bond premiums, an appropriate share of development and administration costs, and any irrecoverable VAT.

The level of funding that can be awarded for strand 1 categories is limited to a ceiling of 80% of project costs.

Strand 2: Gap Funding for Sites of Any Tenure Mix

Under strand 2, a subsidy can be awarded to an eligible enterprise to support:

• the acquisition of land, site, existing buildings and / or interest in an entity for the provision of sites of any tenure mix,
• the works costs for sites of any tenure mix, and
• on costs for sites of any tenure mix.

Eligible costs which can be funded under strand 2 include:

• the purchase price of land, sites, buildings or business interests (including shares or partnership interests), related transaction taxes, legal and professional fees, and any irrecoverable VAT;
• costs associated with core construction and site development works, remediation and abnormal costs, heritage retention, statutory and compliance‑driven works, on‑site and off‑site infrastructure and placemaking and community facilities, and any irrecoverable VAT; and
• professional and advisory fees, monitoring, surveys and valuation/administration costs, and net gains/losses via interest charges on development period loans.

The level of funding that can be awarded for a strand 2 subsidy is limited to a ceiling of 50% of project costs.

What conditions must a subsidy meet to fall under the Housing Streamlined Route?

In addition to falling within one of the above two strands, the funding must:

• be granted to an eligible enterprise, i.e. any entity involved in the delivery or provision of housing, including developers, providers of social housing, local authorities, or charities or other entities created for the purpose of delivering housing;
• be limited to what’s necessary to bridge a viability gap (and this gap mustn’t have been caused by the fault, negligence or default of the party receiving the subsidy);
• not fall within any category of subsidy already expressly prohibited (such as unlimited guarantees, subsidies conditional on performance, use of domestic inputs or relocation, subsidies breaching international obligations, or certain subsidies to ailing or insolvent businesses or to air carriers); and
• include appropriate safeguards, such as recovery/clawback mechanisms.

What this new route means for businesses

Whilst the Housing Streamlined Route is expected to speed up the delivery of housing and provide increased legal certainty, there are several important considerations:

• Significant administrative requirements: To seek an award under the Housing Streamlined Route, eligible enterprises must be able to show the public authority set to make the award that they meet the requisite criteria. They must be prepared to provide detailed information, including a description of the project, the key delivery milestones, and a full breakdown of all expected costs, income and their own contributions. All this information must be adequately documented from the outset, and kept up to date throughout the course of the project.
• Importance of the viability gap assessment: The preparation of a viability gap is essential to the subsidy being able to pass through the new route. This must be comprehensive, proportionate to the size and nature of the subsidy, and take account of all other subsidies for the same project. Although ultimately, the public authority must ensure that it is satisfied with the assessment, the assessment itself can be carried out by the recipient, the authority or both.
• Clawback/recovery risk: Clawback provisions must be included in the agreement between the authority awarding funding and the developer/recipient of the subsidy in case the project doesn’t proceed, key milestones are missed, costs fall or income rises so the full subsidy is no longer needed, the scope changes materially, or the policy objective is not delivered. Funding recipients must ensure programme certainty, robust monitoring and cost discipline, to avoid the risk that comes with incomplete or materially different project delivery.

The Housing Streamlined Route: How we can support you

If you’re looking to receive public funding for housing development, the creation of this new streamlined route to speed up housing development in the UK should be welcome news. However, the Housing Streamlined Route still comes with administrative burden and potential risk. Careful planning, documentation and execution of projects will be essential.

Our Competition and Foreign Investment team can bring specialist knowledge and experience  to support your compliance with the subsidy control rules and help you navigate the new route. For more information on the Housing Streamlined Route, or for advice on any other aspect of subsidy control, please get in touch with Sarah Ward or Liz Turner.