Pioneering New House Building Model To Be Considered

30th July 2010

Highland Councillors are being asked to consider investigating the feasibility of a pioneering new model of providing much-needed affordable homes in the Highlands.

It could see a new build programme of 650 houses over a five year period.

The idea is for the Council to work with a private sector partner to release the equity currently tied up in its Council houses. As houses become vacant they would transfer to the private sector partner in return for a capital payment. The capital would be used to build new houses for let as Council tenancies.

A key point to note is that the Council would continue to allocate, manage and maintain the stock, based on agreed fees per unit to be paid to the council by the partner.

The transferred houses would be relet to applicants on the Highland Housing Register at rent levels pitched between the average council rent and private rents, currently estimated at £75 per week (charged over 52 weeks). The average council rent for the current financial year is £59.76 (over 52 weeks).

Properties would revert to Council ownership at nil cost after 25 years.

Councillor Margaret Davidson, Chairman of the Council's Housing and Social Work Committee, said: "This is an interesting proposition that has come forward from our Housing and Property management team, which allows the Council to release equity on the asset value of council housing becoming vacant to relet to generate funds for new council house building. We estimate this could number 650 over a five year period, The number could be significantly increased if the Scottish Government continues to provide subsidy for Council house building.

"The Housing and Social Work Committee will be asked to agree to undertake and fund a full feasibility assessment on the equity release model as a means to deliver additional affordable housing in the Highlands. We would work closely with the Scottish Government in developing the model.

"We would then come back to the Committee with a detailed business case."

She stressed that addressing the shortage of affordable housing in the Highlands is one of the Council's key priorities.

She added: "Strengthening the Highlands" has a target of 2,000 new affordable homes by 2011. We are on target to meet this commitment, but have identified ongoing high levels of demand for additional housing for rent beyond 2011. Successive Local Housing Strategies have identified the need for additional housing supply as the main strategic issue in relation to housing."