The Scottish Government has delivered more action to increase the delivery of affordable housing with the announcement of a £15 million increase to its charitable bond investment programme.
Charitable bonds are a way of providing loans to social housing providers, which are repaid over a period of up to ten years. The 2018/19 budget for charitable investments is increasing from £25m to £40m, generating an estimated £10m through interest raised on the bonds.
Announcing the additional funding on a visit to Kingdom Housing Association’s regeneration project in Kincardine, housing minister Kevin Stewart said: “We are always looking at ways we can increase the supply of affordable housing and support developers, housing associations and councils get new projects off the ground. Part of our pledge to deliver 50,000 affordable homes is to make the most of existing public funds and secure additional private sector investment.
“We are the only government in the UK to invest in charitable bonds. The interest we receive from the bonds is given to social housing providers and is another important step towards achieving our target for affordable homes.”
To date the Scottish Government has invested in 16 charitable bonds, providing almost £95m development finance for more than 1,000 affordable homes, and generating in excess of £20m in additional charitable bond donations for social housing projects.
The investment in Allia’s charitable bonds has so far provided loans to 11 housing associations across Scotland. The interest on these loans will create a grant fund of £20m to support the delivery of houses for those on the lowest incomes.
Phil Caroe, director of social finance at Allia, said: “Allia’s charitable bond programme with Scottish Government has been a great success over the last three years, offering a unique source of finance that is supporting new developments around the country.
“We’re delighted that the Scottish Government is now increasing its funding for this programme, which will result in even more people in Scotland being able to live in an affordable home.”
The Kincardine development by Kingdom Housing Association includes 49 mixed tenure affordable homes, partly funded from charitable bond loans.
Bill Banks, chief executive at Kingdom Housing Association, added: “At Kingdom we are progressing an increased development programme, which will contribute to the 50,000 target and we are aiming to optimise the range of funding sources available to support and deliver the programme.
“The Allia charitable bond funding of £15.25m drawn by Kingdom so far is a welcomed addition to this portfolio supporting delivery of up to 293 affordable homes.”