Theresa May pledged to work in partnership with associations to get more people on the property ladder and provide housing to those who can’t afford to buy.
Under the £2bn scheme, associations will be able to apply for funding as far ahead as 2028/29.
The prime minister said the long-term guarantee will enable stability for associations to build homes and make it easier to access private finance.
Speaking at National Housing Federation Summit, the prime minister said: “Rather than simply acquiring a proportion of the properties commercial developers build, I want to see housing associations taking on and leading major developments themselves.
“Given the right tools and the right support, you can act as the strategic, long-term investors in the kind of high-quality places this country needs.
“To put it simply, you get homes built. And I want to work with you to transform the way we do so.”
May added that too many people look down on social housing.
She called on housing associations to help change attitudes and make housing that people are proud of.
More work to do
Jackie Bennett, director of Mortgages at UK Finance, said: “Today’s announcement provides much needed certainty regarding the government’s commitment to the social housing sector, enabling housing associations and their private funders to plan and build for the future.
“Affordable housing across the UK is an economic and social priority and lenders are committed to playing their part.”
Ben Denton, managing director of Legal & General Affordable Homes said there is still more work to be done by the government to improve the supply of affordable housing.
He added: “Over the past decade, only 3,000 affordable homes have been delivered each year, highlighting the need to smooth the way for more institutional money to enter the sector.
“Having recently launched our affordable homes business, we are looking forward to proactively working with government and local authorities to bring forward institutional funding to deliver the additional affordable housing that the nation so desperately needs.”