Putting the subsidy in subsidised housing: Evidence from the English Affordable Housing Programme on the causal effect of capital grant on affordable housing supply

England suffers from a chronic undersupply of affordable housing, in particular the social rent tenure. Long-term there has been a decline in government capital grant for new social rent supply, which makes a 2018 policy change that provided additional grant in areas of ‘high affordability pressure’ a notable exception. In this paper I evaluate the causal effect of the policy change on affordable housing starts in 2019/20. Using a fuzzy regression discontinuity design I estimate the treatment effect at 0.74 additional social rent starts per 1,000 dwellings in a local authority. Disaggregating by provider type, the treatment effect was 0.36 additional social rent starts by housing associations per 1,000 dwellings in a local authority. However, I find no causal effect for social rent starts by local authorities, or affordable housing starts irrespective of tenure. The findings suggest the policy was an effective, albeit limited, intervention for expanding affordable housing supply.