Affordable Housing Supply Programme (AHSP): process and procedures MHDGN 2023/01

 Introduction

Note: A pdf version of this guidance note is available within supporting documents

Housing to 2040 – Scotland’s first long term housing strategy – sets out the Scottish Government’s ambitions for how it wants the housing and communities of the future to be, with actions on how to achieve that.  The strategy shows how integral housing is to the Scottish Government’s objectives of tackling poverty and inequality, creating and supporting jobs, meeting energy efficiency and decarbonisation aims as well as fuel poverty and child poverty targets, and creating connected, cohesive communities.  That is why A Fairer, Greener Scotland: Programme for Government 2021-22 commits that 110,000 affordable homes will be delivered across Scotland by 2032, with at least 70% of these in the social rented sector and 10% in remote, rural and island communities.

This guidance note therefore (a) details the process for planning the delivery of grant-funded homes for social rent, mid-market rent and new supply shared equity through the Affordable Housing Supply Programme and (b) outlines the procedures to be followed by grant applicants, grant recipients and grant providers when delivering these homes.  It supersedes MHDGN 2022/02 and takes immediate effect.

The main changes between this guidance note and MHDGN 2022/02 are as follows:

• an uprated set of affordable housing investment benchmarks is reflected in this guidance note, alongside illustrative examples showing how these work in practice – these benchmarks are 16.9% higher than the previous set (this percentage increase reflects the Scottish Social Housing Tender Price Index for the year to December 2022)
• an additional 'quality measure’ benchmark for the installation of electric vehicle charge points has been introduced
• the quality standards that would require to be met when purchasing ‘second-hand’ residential dwellings with vacant possession have been included
• RSL social rent benchmark assumptions are reintroduced for grant assessment purposes (Annex C), and
• information is provided on the Scottish Government’s Heat Network Fund.

In line with the former Cabinet Secretary for Social Justice, Housing & Local Government’s letter of 21 February 2023, grant applicants which intend to apply for grant funding through the Affordable Housing Supply Programme from 1 December are reminded that homes within new build and conversion projects will require to contain zero direct emissions heating systems (unless there are compelling reasons why this would not be considered appropriate, or where a valid building warrant application has been submitted prior to that date).

Grant applicants should also note that this guidance note will be updated further over the coming weeks (a) to reflect Fair Work First guidance which will apply to grants awarded on or after 1 July 2023 and (b) to provide guidance on how the Affordable Housing Supply Programme can accommodate the purchase of properties from landlords leaving the private rented sector with a tenant in situ, where this meets a clear strategic purpose and where the tenant is at risk of homelessness.  If any grant applicant is looking to explore any such purchases meantime they should continue to contact their local More Homes Division area team office.

Throughout this guidance note the following terms are used:

• ‘grant applicants’ and ‘grant recipients’ – this refers to local authorities, RSLs, local authority arms-length external organisations and RSL subsidiaries, and
• ‘grant provider’ – this refers to Scottish Government More Homes Division area offices or, in the case of Edinburgh and Glasgow, the City Councils (known throughout the guidance as ‘TMDF authorities’). 

Any questions about this guidance note should be directed to the relevant grant provider.