Infrastructure Investment Plan 2015: progress report for 2020 to 2021

Housing

Key achievements over last five years including progress up to 2020-21

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.

During the Parliamentary 2016-2021 term, our target was to deliver 50,000 affordable homes, and within that, 35,000 homes for social rent backed by investment of over £3.5 billion. This is the single biggest investment in and delivery of affordable housing since devolution.

Over the period 1 April 2016 to 31 December 2020, a total of 37,964 affordable homes have been delivered towards the 50,000 affordable homes target, including 25,677 for social rent, 4318 for affordable rent and 7969 for affordable home ownership.

The impact of the lock down in March to June 2020 meant that there was a necessary pause in the delivery of affordable homes at a critical time in our target period. Although we will not now meet the 50,000 affordable homes commitment by the end of this parliament, we are continuing to work closely with partners to deliver the remaining homes during 2021-22 in line with COVID-19 safe site operating procedures.

Since 2016, we have made available over £800 million to help prospective buyers to access homeownership across our range of shared equity schemes; we estimate that this will have assisted over 27,000 homebuyers into home ownership by 31 March 2021.

We have supported the unlocking of sites through the Housing Infrastructure Fund (HIF). To date, HIF has provided £48 million of loan and grant investment which we expect to unlock around 12,000 houses, of which 3,600 will be affordable through this investment over the next 10-15 years.

Since 2016, we have provided £102.5 million of Financial Transactions loan funding, enabling private/institutional investment into large-scale mid-market rent (MMR) housing projects, creating a total investment package of £302.5 million to deliver up to 2,000 long-term affordable MMR homes across Scotland.

Innovative delivery through the National Housing Trust – the first guarantee based scheme for housing in the UK, has contributed over 1,700 affordable homes across Scotland.

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 consent to on-lend up to £248 million along with a one off £16 million capital grant to City of Edinburgh Council (for the mid-market rent (MMR) units only), to support a new city region housing company to deliver a minimum of 1,500 homes at mid-market rent (MMR) and competitive market rent levels of which 728 units will be for mid-market rent. This company, known as Edinburgh Living, will have completed 299 MMR units by 31 March 2021 with the remaining MMR completions from 2021-22 to 2024-25.

We launched the Rental Income Guarantee Scheme (RIGS) on 12 October 2017 to support Build to Rent in Scotland, with support from Scottish Futures Trust. 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 (Private Rented Sector) homes. RIGS was developed in consultation with the industry, addressing the uncertainty around rental income streams in this emerging market.

We have extended the £30 million funding for the Rural and Island Housing Funds beyond March 2021. This Fund is open to a wide range of applicants including community bodies, private landlords and landowners and is specifically targeted at increasing the supply of affordable housing of all tenures in island and rural communities.

We are the first, and remain the only government in the UK to invest in Charitable Bonds, a form of ethical investment that creates loan finance to fund affordable housing and generates charitable donations. Investment spend for the financial year 2020-21 was £39.7 million, generating charitable donations of over £9 million. Total spend on the Charitable Bond programme will be over £260 million by the end of 2020-21.

Activity going forward

Recognising the importance of everyone having a safe and affordable home that meets their needs, Housing to 2040 – Scotland's first long-term housing strategy – outlines what the Scottish Government wants housing and communities to look and feel like for the people of Scotland, with actions on how to get there.

One of the key priorities in the strategy, which will be taken forward subject to the outcome of the election, includes delivering 100,000 more affordable homes by 2032, with at least 70% of these being for social rent. These homes will support people's health, wellbeing and life chances, can help to tackle poverty and climate change, and are a major investment in the economy supporting about £16 billion in total investment and up to 14,000 jobs a year.

Over the next 5 years (2021-22 to 2025-26), we will invest £3.5 billion in housing including Financial Transactions in 2021-22. This funding will help to deliver against our new 100,000 affordable homes target by 2032.

• £3.44 billion of that will deliver more social and affordable homes, continuing to ensure the right homes in the right places.
• This includes £831.615 million to deliver affordable homes across Scotland in 2021-22, and is part of a wider planned capital grant investment of over £2.9 billion over the next 5 years.
• This is £488 million more than the equivalent planned investment of £2.430 billion capital grant over the current five-year period – a planned increase of 20% in capital grant investment in affordable housing.

We will continue to take forward our Achieving Excellence in Housing Development programme, which is driving value for money and quality in the Affordable Housing Supply Programme. We have led ground-breaking innovation in housing financing approaches and delivery models enabling delivery of over 20,000 new homes across all tenures - positioning Scotland as a leader in this field. Innovations have included use of government guarantees, loan and equity funding, and collaboration and risk sharing with local authorities and the private sector. Public and private sources of funding and financing have been combined to create new investment opportunities for our partners and secure major additional investment in housing and social infrastructure programmes.

Looking forward, in addition to our investment in affordable homes through our Affordable Housing Supply Programme, we have already committed to supporting the growth in Scotland of the building of homes by the private sector for long-term private renting. In recent years, we introduced a package of measures – tenancy reform, planning advice, tax relief and a government guarantee to give certainty of rental income to investors – to encourage investment in private sector "Build to Rent". A substantial pipeline of around 9,000 Build to Rent homes in Scotland's major cities is now progressing, with several developments moving to construction stage, contributing to place-making and regeneration of city sites.

Over the next decade, we will continue to support the building of homes for private rent, with a focus on maximising delivery of these homes at the affordable end of market rents, working with private sector investors and partners whose business models match our ambition to improve affordability for tenants.

The Scottish Government is committed to increasing the supply of new homes and it is crucial that this is taken forward in a way that supports the right housing in the right places not just in terms of numbers, but as an integral part of a place-based approach to planning for housing. The measures introduced through the Planning (Scotland) Act 2019 together with the existing structures supporting housing delivery will ensure that we are meeting the housing needs of Scotland's population including through the provision of land for housing.