A £22 MILLION investment has been announced by the Scottish Government to help deliver more affordable housing.
As part of Scotland's Charitable Bond Programme, the Scottish Government has backed a scheme to increase investment in affordable homes by issuing more bonds.
The two new bonds, which were issued via the finance intermediary Allia to housing providers Link and Cairn Housing, aim to provide financial support for more than 150 new homes.
The programme, which was established in 2014, provides loans to social landlords to construct new affordable homes.
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Interest from these loans is then reinvested by the Scottish Government into the affordable housing budget to support more homes for social rent.
The number of bonds issued by the Scottish Government has now risen to 40 with a total investment of more than £482m into the scheme.
Housing Minister Paul McLennan (below) said the scheme has been a successful model for the Government and that the funding is vital for house building across Scotland.
He said: “Tackling the housing emergency requires bold thinking and investment in charitable bonds is another tool we can use to increase investment in our affordable housing budget while also allowing social landlords to access vital funding to build new homes.
“This has been a successful model in the past but is reliant on financial transaction funding from the UK Government. This funding, which is vital in housebuilding, has been cut by 62% since 2022.
“While we are demonstrating what we can do with the devolved powers and levers we have, it is vital that the UK Government reverses that cut so we can increase investment in the affordable housebuilding sector.
“We have a strong track record in affordable housing with 133,000 homes delivered since 2007, 93,000 of which are for social rent. However, tackling the housing emergency requires joint working from the Scottish and UK Governments and local authorities.”
The bonds programme was created 10 years ago by the Scottish Government in response to the demand from housing associations for better access to appropriate finance.
The investment scheme is regarded as a more ethical practice as where the margin in investments is usually paid as interest to the bond holder, tax, or profit to shareholders, it is released as grant funding instead.
Peter Freer, director of Debt Capital Markets and head of Allia C&C’s Scottish Office, said both companies have been working positively with the Scottish Government to deliver more homes.
He said: “These two bond issues demonstrate the ongoing success of the charitable bond programme.
“With the Scottish Government’s investment in the bonds, Allia has been able to provide Link with additional funding to support its significant development programme and make our first loan to Cairn Housing Association.
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“Both organisations are providing much-needed new affordable homes, and we look forward to continuing our work with the Scottish Government to create more positive impact across Scotland.”
Link was issued a bond with the value of £16,006,385 while Cairn Housing Association’s bond value is £6,019,085.
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