Infrastructure Investment Plan 2015: progress report 2017

Housing

We want everyone in Scotland to live in affordable, quality homes that meet their needs. This is central to building and sustaining a fairer and more prosperous Scotland.

Scotland has a strong record in housing delivery. Over the last Parliamentary term, 2011-16, we exceeded our 30,000 affordable homes target. A total of 33,490 affordable homes were delivered, 22,523 of these homes were for social rent, including 5,992 council homes. Building on this success, we and our partners want more homes delivered across all tenures.

During the current Parliamentary term, 2016-21, our target is to deliver more than 50,000 affordable homes, 35,000 of which will be for social rent, backed by investment of over £3 billion. We have listened to our partners and will continue to work with them closely to deliver More Homes Scotland - our overarching approach to support the increase in the supply of homes across all tenures:

• Over £756 million will be available in 2018-19 to fund this ambition – this compares to £590 million in 2017-18.

• £522 million of the More Homes grant funding in 2018-19 continues to be capital funding for the affordable housing supply programme, chiefly for new social housing. This is a £147 million increase on the equivalent figure for 2017-18.

• For the first time, all councils across Scotland have received long term resource planning assumptions totalling £1.754 billion to March 2021, providing the certainty needed to deliver our ambitious target.

• The target to deliver at least 50,000 affordable homes will support between 12,000 and 14,000 full-time equivalent jobs in the construction and related sectors over this Parliament.

• We have put in place a programme, Achieving Excellence in Housing Development, which is driving value for money and quality in the Affordable Housing Supply Programme. This involves developing a performance improvement system for housing development, working with housing associations to improve their procurement capability, and developing a sector wide approach to modern methods of construction. Further projects are under consideration.

• In 2017-18 we have made available £135 million to help up to 3,500 people access homeownership. £70 million has been allocated to the Open Market Shared Equity scheme to help up to 1700 first time buyers on low to moderate incomes and £65 million was allocated to the Help to Buy (Scotland) Affordable New Build and Smaller Developers Schemes to help up to 2,000 first time buyers and existing homeowners buy a new build home.

• In 2016 we launched the five year Housing Infrastructure Fund, linked to the delivery of the 50,000 affordable homes target. The fund provides grant and loan support for housing related infrastructure projects which have stalled or can’t proceed due to the level or cost of infrastructure. Local authorities are invited to submit strategic sites for consideration as part of their Strategic Housing Investment Plans ( SHIPs). While HIF can support all tenures priority is given to those projects which will deliver affordable housing by 2021.

• We remain committed to the expansion of affordable housing through mid-market rent ( MMR) schemes. This includes current delivery through Innovative schemes like the National Housing Trust– the first guarantee based scheme for housing in the UK, as well LAR Housing Trust that will deliver £120 million of total investment towards delivery of 1,000 MMR homes.

• We have also selected one proposal from the recent MMR Invitation which has the potential to deliver around 1,000 mid-market rent homes while leveraging significant pension fund investment into the affordable housing sector and is nearing completion of due-diligence on Scottish Government funding terms.

• We have supported local authorities to develop plans to boost the supply of affordable housing through prudential borrowing, and delivering City Deal commitments on housing. This includes approval this year of consent to on-lend up to £248 million along with a £16 million capital grant to City of Edinburgh Council to support a new city region housing company deliver a minimum of 1,500 homes at mid-market rent and competitive market rent levels.

• We launched the Rental Income Guarantee Scheme ( RIGS) on 12 October 2017 to support Build to Rent in Scotland, with Scottish Futures Trust working with us as our delivery partner. It is designed as a high-leverage stimulus to attract further institutional investment in the emerging Build to Rent market, delivering new high quality professionally managed PRS homes. RIGS was developed in consultation with the industry, addressing the uncertainty around rental income streams in this emerging market.

• We consulted local authorities, Registered Social Landlords and others in 2016 on the resources, skills and expertise they need to help build delivery capacity and to identify where the critical gaps are and how best to fill them. We continue to support the Highland Hub to enable strategic engagement between the Scottish Government, local authorities and delivery partners.

• We have maintained £30 million funding for the Rural and Island Housing Funds and in December 2017 extended the timescales of the Funds from the three years originally announced to five years (to March 2021). These Funds are open to a wide range of applicants including community bodies, private landlords and landowners and are specifically targeted to increase the supply of affordable housing of all tenures in rural Scotland.

We are maintaining Scotland's leadership in financial innovation and competence, continuing to work creatively with our partners and use innovative ways to deliver more new homes across all tenures for less public investment.

The innovative use of government guarantees, loans, grant recycling and leveraging in new sources of private funding is generating over £750 million of housing investment in the delivery of around 6,000 affordable homes – the majority of which will contribute to the 50,000 affordable homes commitment.

We are also supporting and enabling investment in the emerging Build-to-Rent housing market with the potential for delivery of an additional 2,500 new homes for market rent stimulating up to £500 million private investment.

We are the first, and remain the only, national government in the UK and public sector body in Scotland to invest in Charitable Bonds, a form of ethical investment which creates loan finance to fund affordable housing, and generates charitable donations. Investment spend for the financial year 2017-18 is expected to total £24.7 million, generating grant of £6.73 million. Total spend on the Charitable Bond programme is expected to be just under £94.7 million by the end of 2017-18, supporting the delivery of approaching 1,000 homes.

We have also committed to the reform of the current planning system, with a focus on improving the effectiveness of planning processes that support the delivery of good quality housing developments. In December 2017 the Planning (Scotland) Bill which is a vital element of a wide package of reforms, was introduced, responding to the Independent Review of the planning system which reported in May 2016.