Affordable Housing Supply Programme: out-turn report - 2022 to 2023

Scope of the Affordable Housing Supply Programme (AHSP)

The AHSP aims to deliver a mix of social housing and other affordable housing, which are defined as follows:

• Affordable housing within the context of the AHSP includes both social and Mid Market Rented homes, and also low-cost home ownership properties.
• Social housing is rented housing let by councils and Registered Social Landlords, normally with a Scottish secure tenancy agreement.

In 2022 to 2023 investment through the AHSP was made up of a variety of different grant mechanisms and loan and equity funding. The following provides a summary of the types of support given in 2022 to 2023.

Grant to Housing Associations

Grant is available to Registered Social Landlords (RSLs) to acquire land or buildings and to build, convert or improve housing for social rent, or their subsidiaries for Mid Market Rent or Low-cost Home Ownership. RSLs are registered with and regulated by the Scottish Housing Regulator (SHR).

Support to Mid Market Rent (MMR)

Mid market rent properties are aimed at assisting people on low and modest incomes to access affordable rented accommodation. This housing option is targeted at people on incomes that are not enough to afford owner occupation but who can afford to pay more than a social rent. In 2022 to 2023 mid market rent properties were mainly provided by Registered Social Landlords (RSL) subsidiaries. In exchange for the financial support from Scottish Government, the landlord accepts restrictions on the rents that they can charge. Mid market rent is supported by the Scottish Government through grant funding as well as innovative initiatives including loan finance and financial guarantees.

Council House delivery

Grant is available to support local authorities to deliver more council homes.

Low-cost Initiative for First-Time Buyers (LIFT)

LIFT brings together ways to help households access home ownership. The LIFT shared equity schemes in operation were New Supply Shared Equity (NSSE) and the Open Market Shared Equity scheme (OMSE)

Under the New Supply Shared Equity scheme, the Scottish Government gives grants to Registered Social Landlords to help them build or buy new homes for sale and provide them on a shared equity basis to people on low to moderate incomes.  Buyers fund 60 to 80 per cent of the purchase price and the Scottish Government holds the remaining share under a shared equity agreement.

The Open Market Shared Equity scheme helps eligible buyers on low to moderate incomes to buy a home that is for sale on the open market. It is administered through an agent on behalf of the Scottish Government. Purchasers fund 60 to 90 per cent of the purchase price and the Scottish Government holds the remaining share under a shared equity agreement.

Partnership Support for Regeneration (PSR) - (former Grant for Rent and Owner Occupation (GRO) grants)

These are grants to private developers to build houses for sale. They are used to introduce housing for sale in areas with little or no private housing and to help meet local shortages.

Grant is only considered where projects meet the local strategic investment objectives of the area and are consistent with the Local Housing Strategy of the local authority where development is proposed.

Home Owners’ Support Fund (HOSF)

The Mortgage to Rent scheme and the Mortgage to Shared Equity scheme make up the Home Owners’ Support Fund, which offers help to home owners at the lower end of the market who are experiencing difficulty in paying loans secured against their property. Having received advice from an accredited money advice service, homeowners apply to the overall Home Owners’ Support Fund programme, and all applications are then assessed to determine suitability for either Mortgage to Rent or Mortgage to Shared Equity.

Mortgage to Rent enables home owners to remain in their home by selling it to a social landlord - such as a housing association or local authority – and allowing them to continue to live there as a tenant. Mortgage to Shared Equity involves the Scottish Government taking a temporary equity stake in the property allowing the home owner to reduce their secured loan.

Rural and Islands Housing Fund (RIHF)

The demand-led £30 million Rural and Islands Housing Fund is open to a wide range of potential applicants, including those not able to access traditional affordable housing funding streams such as community bodies, rural landowners, landlords and private developers. It enables them to take a more active role in meeting the housing needs of their community. The fund continues to operate over the current five-year Parliamentary term, with up to £30 million available until March 2026.

Housing Infrastructure Fund (HIF)

The Housing Infrastructure Fund (HIF) funds housing infrastructure where projects have stalled or cannot proceed due to the level or cost of infrastructure. With the launch of the Housing to 2040 Strategy, we have set out a clear case for “infrastructure first” investment to support long-term housing development, focused on strong place-based investment approaches.

Investment opportunities

Investment opportunities such as government guarantees, loans and grant recycling are supporting our ambitions to create communities that are inclusive, empowered, resilient and safe, while expanding the delivery of more homes across all tenures.

We continue to collaborate across the public and private sectors, working with local authorities and affordable housing providers to maximise available public resources in order to harness increased levels of private finance.

A number of other projects have complemented the Affordable Housing Supply Programme’s Mid Market Rent (MMR) support across Scotland including Local Affordable Rented (LAR) Housing Trust and Places for People (PfP) Capital through the MMR Invitation.

Places for People Capital were selected as the preferred bidder in the MMR Invitation process and are supported by a £47.5 million Scottish Government loan funding. Following this, PfP Capital have grown their fund with institutional investment - including pension funds - to £225.5 million to provide MMR Homes across Scotland.

Local Affordable Rented (LAR) Housing Trust – a Scottish charity supported by £55 million Scottish Government loan funding and have secured additional institutional investment of £65 million, to provide MMR homes across Scotland.

Mid Market Rent invitation – Places for People (PfP) Capital were selected as the preferred bidder and are supported by a package of Scottish Government loan funding and pension fund investment to provide MMR homes across Scotland.

Charitable Bond – The Charitable Bond model provides loan finance to social landlords for new affordable housing, while also generating capital funds, in the form of charitable donations. In some instances, the donations formed the sole subsidy contribution from the Scottish Government towards the development of social housing but in other cases they were donated to complement grant funding through the AHSP.