The Scottish Government subsidises the cost of affordable housing through the provision of grant funding. Most of this subsidy is awarded to housing associations and other Registered Social Landlord’s. In 2010/11 out of £471M funding for housing just £5M (1%) was allocated for the development of rented housing by providers other than RSL’s. And in recent years the amount of funding from the Scottish Government for housing has fallen sharply.
Communities planning to develop affordable housing for rent have two sources of possible funding: the Scottish Government Innovation Fund and Second Homes Council Tax funding, from the local council.
This is a £10M fund (2011/12) from the Scottish Government designed to encourage innovation in the development of affordable housing. Applications could be made by a range of organisations, including community trusts, as well as the private sector.
Bids to the fund were expected to be:
- offer value for money;
- reflect an acceptable level of risk;
- support the local authority housing strategy and reflect their priorities for investment;
- provide quality houses and sustainable places in which to live.
These formed the assessment criteria against which applications would be judged.
Since 2005 local authorities have been able to reduce the council tax discount available to second home owners from 50% to 10%, with the extra money being used to support affordable housing. Local authorities are permitted to use this funding to enable the development of housing by community organisations (as well as RSLs, individuals (through RHOGs), the private sector and the council itself).
This letter provides further detailed guidance and gives the additional facility to allow these funds to:
buy off-the-shelf houses from private developers for affordable housing use;
be used to support revenue expenditure related to the delivery of agreed housing activities; and
be disbursed to other organisations and individuals beyond Registered Social Landlords (RSLs) and Councils.
Priorities for the use of Second Homes Council Tax are set out in the local authority Strategic Housing Investment Plans (SHIPs), which is decided by the council in conjunction with partners such as the local housing associations.