Andy Mallice: Vision needed to plug gap in social housing

Thirty years ago, Scotland had one of the highest proportions of citizens in social rented housing in the world. But since the right to buy (RTB) was introduced by Margaret Thatcher in 1980, the sector has lost about 500,000 homes – about half the total stock in 1979.

This has had an inevitable knock-on effect on waiting lists, with Shelter Scotland estimating that there are 160,000 households waiting for a council or housing association home.

It's the supply side that's wanting. To help stimulate this, the Scottish Government has ended RTB for new tenancies, stemming the sale of existing homes and encouraging new ones to be built.

Building of more than 1,000 new council houses started in 2010 – up from a figure of zero in 2005 – and more than 5,000 new housing association homes were also on site. While this isn't insignificant, I believe demand is unlikely to be met unless we find new financial models to boost social housebuilding.

For example, there is a discrepancy in central government grants. New council homes attract a maximum of 30,000 subsidy per unit, but for new housing association homes the subsidy is 70,000.

At the same time, housing associations are estimated to be sitting on free cash reserves of 300 million, in addition to 2.7 billion in assets. If they're saving for a rainy day, surely this is it?

The Scottish Government has proposed regularising subsidies, encouraging housing associations to release surpluses and reinvest them in new homes. Another option is introducing shared equity models between housing associations and developers, which could remove the need for government subsidy altogether.

Under this arrangement, some units would need to be offered for private sale so developers can recoup their investment. But it would dramatically cut costs to the taxpayer and help to create more balanced, mixed-tenure estates. We can get better value for the public purse and still meet the demand.

lAndy Mallice is managing director of construction company ISG in Scotland