Thursday, 23 October 2014

Lack of interest in existing scheme prompts council rethink

£15m Stirling deal heralds new model

A Scottish council has become the first to sign a deal to buy homes under the National Housing Trust scheme without using any private sector funding.

Stirling Council has agreed a new variant of the NHT, which allows councils to borrow money, underwritten by the Scottish Government, to buy new homes from developers.

The council said the move will secure £15 million of funding, using its prudential borrowing powers, to build 110 homes and refurbish a further 60. The homes will be owned by the joint venture and let at mid-market rent for between five and 10 years, after which time they will be sold.

Under the original NHT, launched in 2010, councils, the Scottish Government-owned Scottish Futures Trust and private developers formed partnerships to buy homes. Developers built homes to agreed timescales and sold them to the partnership, in which they would hold a stake and contribute around 30 per cent of the funding.

So far, contracts have been signed to build 1,000 homes, and Stirling has bought 16 homes under the first round.

Under the new version agreed by Stirling, the developer will build the homes but doesn’t have to be part of the partnership or contribute funding.

Stirling said the move was due to a lack of interest from developers in the second round of bidding for NHT. The council will partner only with SFT and provide finance using funds raised from the Public Works Loan Board. The Scottish Government will guarantee interest payments to the council.

Violet Weir, housing portfolio holder at Stirling, said: ‘Like every council our budgets are under pressure and we need to find new ways of doing things and new partners to work with.’

A spokesperson for SFT said discussions are underway with other councils about developing similar schemes, but none have been finalised.

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