Blog Friday 17th April 2026 - Capsticks - The Evolving landscape of Streamlined Routes Under the Subsidy Control Act 2022

The UK Subsidy Regime continues to develop at pace with the most recent addition, the sixth route being the Housing Streamlined Route, laid before Parliament on 14^th April 2026.

The Streamlined Routes indicate a significant effect in Government’s attempts to simplify subsidy delivery in priority sectors. The Streamlined Routes are designed to reduce the administrative burden and provide greater certainty for public authorities as they can be used (if the conditions are met) to award subsidies without the need to assess them against the subsidy control principles. This is because the Government as assessed the Streamlined Routes as being compliant with the requirements of the subsidy control regime. Subsidies given under Streamlined Routes do not need to be referred to the Subsidy Advice Unit

The Housing Streamlined Route (also known as the Housing Streamlined Subsidy Scheme) provides for the giving of subsidies by public authorities that fall within the following strands set out in the Schedule. The strands comprise of the following:-

• Strand 1 – Gap funding for social housing and affordable housing
• Strand 2 - Gap funding for sites of any tenure mix

The Scheme provides that an enterprise can receive subsidies under both Strand 1 and Strand 2 for housing projects.

The maximum amount that can be awarded under the Scheme for a single enterprise project is £75m (subject to the cumulation rules set out Section 6.2 of the Scheme).

Subsidies under the scheme may take the form of grants, loans, equity, guarantees and exemptions from specified levies or a combination thereof.

A public authority must not give any subsidy that would prohibit or be in contravention of the requirements Sections 15-29 of the Subsidy Control Act 2022 (the Act) and if any of the social or affordable housing subsidies comprise SPEI subsidies, this may be done provided there is full compliance with SPEI requirements set out in Section 29 of the Act.

Public authorities are strongly encouraged to use objective and transparent selective criteria that are available to potential recipients in advance of giving the subsidy.

The subsidy must only be used to fund and identify viability gap which may include a reasonable profit element.

A viability gap assessment must be carried out by the public authority or the beneficiary or both. Public authorities must consider the cumulative amount of subsidies received by the enterprise for each particular housing projects when carrying out the viability gap assessment.

Strand 1 (Gap funding for social housing and affordable housing) -  Eligible categories and costs

When calculating the subsidy under Strand 1, the maximum subsidy ratio is up to 80% of overall project costs.

There are four categories of eligible costs, these comprise:

Category 1 - Acquisition

These include:

1. Purchase price
2. Purchase of shares and associated transaction costs (e.g. joint ventures, subsidiaries or other housing delivery vehicles)
3. Purchase of a business as a going concern and associated transaction costs
4. Stamp Duty Land Tax (SDLT), Land Transaction Tax (LTT), Land and Buildings Transaction Tax (LBTT), and legal and professional fees associated to the purchase.

Category 2 - Works costs for new social and affordable housing

The following will be eligible works costs for new social and affordable housing :

1. Main works contracts
2. Major site development works (soil stabilisation or demolition costs)
3. Land remediation and abnormal costs
4. Retaining buildings (e.g. listed buildings)
5. Statutory agreements, asset protection agreements associated bonds, party walls, rights of way and other arrangements
6. Additional costs associated with comply with requirements set out in archaeological, conservation, environmental/ ecological requirements including any insurance, fees or other charges
7. On-site and off site infrastructure, this could include infrastructures required by Section 106 Agreements;
8. Placemaking improvements and community facilities
9. Irrecoverable VAT in respect of the above.

Category 3 – Works costs for existing buildings

Subsidy can be awarded to eligible enterprises to support essential work costs for existing buildings (e.g. to convert into social and affordable housing or to mitigate the risk of that housing falling out of use due to deterioration). These costs are listed as Category 3 costs in Strand 1.

Category 4 – On costs

Finally, a subsidy can be awarded to eligible enterprises to support on costs for social and affordable housing (e.g. legal fees and disbursements, lender , valuation and administration fees)

Strand 2 (Gap funding for sites of any tenure mix) - Eligible Category Costs

Again, in the Schedule of the Scheme the eligible categories of costs for Strand 2 are detailed. These included:

1. Category 1 Costs, Strand 2 – Acquisitions - Costs which look very similar to the category of costs for Strand 2 save that the purchase must be strictly necessary and directly attributable to the delivery of the housing or infrastructure [12.7 ]
2. Category 2 Costs, Strand 2 – Works costs for new sites for new housing stocks
3. Category 3 Costs, Strand 2 – On costs.

When calculating the subsidy under Strand 2, the maximum subsidy ratio is up to 50% of overall project costs.

The eligible categories of costs in Strand 1 includes works costs for existing buildings, whereas the eligible categories of costs in Strand 2 only includes funding for work costs for new housing stocks of any tenure mix.

The Scheme is now subject to a period of 40 days, during which time, either the House of Commons or the House of Lords may resolve that the Scheme isn’t approved.

In addition, to the Housing Streamline Subsidy Scheme, you will recall that five other Streamlined Routes have been created; these are:

1. Research, Development and Innovation
2. Energy Usage
3. Local Growth
4. Arts and Culture
5. Communities and regeneration

The first 3 routes were introduced in January 2023, with Arts and Culture and Communities and Culture being introduced in January this year.

The Streamlined Routes are only available where all conditions are strictly met. Even minor non-compliance disapplies the route entirely and a full principals based assessment will need to be carried out.

Each route is designed to support specific Government objectives and with the simplification of compliance process enabling faster project delivery, critical for example in the housing and regeneration sector.

If authorities incorrectly assume eligibility, this would lead to an unlawful subsidy. Where a subsidy falls outside the parameters of a scheme, authorities must revert to the full principles assessment.

Government has made it clear that where streamlined subsidy schemes exists, they should be the first port of call where available and they will provide, for example in the housing sector, greater predictability in funding structures.

Due to their strict conditions and limited flexibility the principles based approach still remains essential for more complex cases.