Innovative funding model to ease city housing woes

AN innovative new scheme returning mothballed flats to use is to provide more affordable housing across the Capital.

Housing Minister Keith Brown was today officially opening Brunstane Apartments in Portobello.

The 35-flat development was rescued from the recession and is now offering 18 affordable homes under a new funding model which brings together the city council, private developers and housing associations.

Mr Brown praised the approach and said it would help ease housing pressures.

Instead of making a grant for new homes, the council has given a financial guarantee to Dunedin Canmore Housing Association, enabling it to borrow at low interest rates and pay developer Springfield Properties for 18 of the flats, which are then made available at mid-market rent for up to ten years.

Under the scheme, Springfield sells the other 17 flats and retains the right to buy back and sell most of the rented flats. Three will remain with Dunedin Canmore in perpetuity, thus increasing the city’s permanent stock of affordable homes.

Springfield can also use the money from the sale of the flats to reinvest in a similar scheme.

The funding model – the brainchild of Matthew Benson, a director of city property company Rettie & Co – can be applied to new-build developments as well.

He said: “It is an important step forward, demonstrating close co-operation between the public and private sectors.

“The structure is flexible and relatively straightforward to implement. Above all, it can deliver a permanent stock of affordable housing at levels well below current grant costs.”

Brunstane Apartments is the second development to be built under the “resonance” funding model. Last year, a similar arrangement saw Dunedin Canmore take on 15 out of 40 flats completed by Springfield in nearby Milton Road East.

Mr Benson said: “This shows it is not just a one-off. The beauty of the model is we can keep on doing it. We have another eight or nine lined up.”

Mr Brown said: “I hope this can act as a catalyst to encourage bolder, innovative approaches that will maximise supply through increased partnership working of this sort.”

City council housing convener Paul Edie said: “Edinburgh has a desperate shortage of affordable housing, and projects like this help people to get on to the housing ladder.”

Sandy Adam, chairman of Springfield Properties, said: “The resonance funding model has the potential to make a significant contribution to the delivery of new homes in Scotland.”