£130m to kickstart stalled building site work

UP TO 1,000 new homes are to be built in Scotland as part of a unique scheme designed to kickstart housing projects stalled by the economic recession.

• Jonathan Fair, head of Homes for Scotland, described the plans as

'an example of innovative thinking'

A new National Housing Trust will be unveiled tomorrow by the Scottish Government that could give cash-strapped councils up to 130 million to turn mothballed housing sites into affordable homes for rent.

By restarting construction on stalled housing sites the new approach is expected to create or safeguard around 1,100 jobs in construction and the wider Scottish economy over the next two years.

The project will make use of the financial expertise of the Scottish Futures Trust and help councils cut down waiting lists without robbing other council departments of cash.

It is expected to operate in areas where there is a shortage of affordable housing and evidence of strong demand from potential tenants.

The homes will be available to tenants for affordable mid-market rent for five to ten years while managing agents would allocate homes to tenants based on criteria previously agreed with the councils.

Some 18 local authorities have already signed up to the scheme or have expressed interest. They include Aberdeen, Dundee and Edinburgh city councils, East Dunbartonshire, Renfrewshire and West Lothian.

The new body, which will be an offshoot of the ScottishFutures Trust, will acquire

new build homes from developers in a joint partnership scheme with the local authority, developers and the Scottish Government.

Under the plan, councils will pay housebuilders 65 per cent of the purchase price upfront, with the balance provided by the developer in loans and equity investment.

The Scottish Government will provide a guarantee to councils to step in with cover funding in the event of financial problems.

Homes would be let on Short Assured Tenancies and would be available to rent for five to ten years, after which they would be sold.

The plan for a new National Housing Trust will be announced tomorrow by housing minister Alex Neil and the Scottish Futures Trust by way of a prior information notice.

Neil told Scotland on Sunday: "The housing market is changing and we as a government have to change with it.

"We have Treasury approval for it and we hope to lay the first bricks of these partner houses by the autumn."

He expects the scheme to help finance 1,000 houses in the first 15 months.

Jonathan Fair, head of Homes for Scotland, said: "It is an example of innovative thinking and new models of working that we need to develop in the changed circumstances of the housing market. It is a very good example of how public-private partnership working can provide the range of affordable housing that we need."

Management committees – involving the developers, councils and the NHT – will be set up to oversee progress on each site or group of sites within a council area. The 65 per cent of funding provided by councils to developers will be funded by borrowing from the Public Works Loan Board.

Developer funding will be 35 per cent. Fair commented: "This should be well within their reach, with the added attraction that the houses are pre-sold. That is a big incentive."

The housebuilding and construction sectors in Scotland have been hit hard by the economic downturn.

The sector has shed an estimated 28,000 jobs in the past two years alone, as demand for new homes crashed amid a mortgage funding drought.