23 Dec 2020

Affordable housing - are we delivering?

Image of construction site

In this blog Ashley Campbell, policy and practice manager at CIH Scotland, takes a look at the Scottish Government’s latest affordable housing out-turn report.

At the start of this Parliamentary term the Scottish Government committed to delivering 50,000 affordable homes, 35,000 of which would be for social rent, by the end of March 2021. The Affordable Housing Supply Programme (AHSP) out-turn report for 2019-20 opens with some impressive statistics, especially when you consider how significantly social landlords have manged to scale up delivery throughout the current five year programme. During 2019-20,

  • 12,886 affordable homes were approved – an increase of 62 percent compared to 2015-16
  • 9,286 affordable homes were completed – up 42 percent compared to 2015-16
  • 12,045 affordable homes were started – 57 percent more than in 2015-16

While there is much to be proud of, the current pandemic which brought all construction to a standstill in 2020 means that the 50,000 affordable homes promised won’t be delivered on time.

The Scottish Government has said that the last of the 50,000 homes will be completed as soon as possible and construction is now up and running again. While it is important that every one of the 50,000 homes is delivered (if a little late) it is even more important to look ahead to what comes next.

The real test will be whether the momentum built up during the current AHSP can be maintained for the next five years and beyond. Working within the context of a global climate emergency and emerging from a pandemic that has made us rethink the way that we use our homes and outdoor spaces also means that social landlords will need to be more creative with housing design and, crucially, with funding.  

So, what really is ‘affordable’ housing and who should pay for it?

‘Affordable’ housing covers a range of housing types delivered under the AHSP. This includes traditional social housing but also ‘other affordable tenures’ such as mid market rent and low cost home ownership.

Under the current AHSP between 2016-17 and 2018-19, Scottish Government funding accounted for 39 percent of the cost of council homes for social rent and 56 percent of the cost for Registered Social Landlords. The rest is covered by the landlord and ultimately paid for by current tenants through their rent.

Social landlords have reported an average planned rent increase for 2020-21 of 2.5 percent. While this is down slightly from 3 percent the previous year, rent increases above inflation have not been uncommon in recent years. In the latest report from the National Panel of Tenants and Service Users, 80 percent of participants cited concerns about future rent affordability.

This figure is worrying enough but the pandemic, Brexit and economic uncertainty are likely to result in more people experiencing financial difficulties and will exacerbate affordability issues in the years to come.

Rents are closely monitored by the Scottish Housing Regulator and the drivers behind increases can be complex but we can be fairly confident that a number of factors are involved – the cost of maintaining and increasing energy efficiency of existing homes, providing a range of statutory and non-statutory services to support tenants and delivering new affordable housing.

Additional costs will also have to be taken into account in the near future, including extra costs associated with the current pandemic and Brexit, new fire safety standards and new standards relating to indoor and outdoor space and digital connectivity for new homes set out in the Programme for Government.

The Scottish Government intends to review benchmark grant rates at some point in early 2021, but social landlords need certainty now to plan ahead and make sure they can deliver the right homes. More importantly, if grant rates are not sufficient and rents keep rising to cover the difference, the term ‘affordable housing’ will eventually lose all meaning.

Research published by CIH Scotland, Shelter Scotland and SFHA in June 2020 concluded that 53,000 affordable homes must be delivered over 2021-2026 to meet housing need. This will be a challenge, especially given the financial pressures that all organisations are facing, but we must rise to that challenge and at the same time, we must ensure that new homes are not being funded by those who can least afford to pay for them.