Scotland confirms record investment in affordable housing, but sector warns it will not be enough

Other planned funding boosts in the housing portfolio include a hike in funding for cladding remediation, from £60m in 2026-27 to £115m in 2028-29, and a one-off increase to energy efficiency and decarbonisation cash of around £15m in 2027-28.

Alongside these headline figures, the SNP confirmed £11.5m of funding for the multi-year Ending Homelessness Together fund, which will be spent on a range of measures including rapid rehousing for those stranded in temporary accommodation, and £1.3m for the Scottish Empty Homes Partnership.

The Scottish government also plans to bring in two new council tax bands from April 2028 which will affect properties worth more than £1m, mirroring a similar planned change in England confirmed by the UK government’s Autumn Budget last year.

Responding to the news, Scotland’s housing sector welcomed the rise in funding but pointed out it will not be enough to meet the country’s housing need as set out in research commissioned by sector bodies last year.

Gillian McLees, the Chartered Institute of Housing’s (CIH) Scotland director, said the Budget provided a “much-needed increase” for the AHSP and said the continued commitment to ending homelessness funding is “vital” in tackling the country’s ongoing housing emergency.

“However, CIH research, commissioned jointly with Shelter Scotland and the SFHA [Scottish Federation of Housing Associations], identified [that] £1.64bn is needed per year for the Affordable Housing Supply Programme,” she added.

Richard Meade, chief executive of the SFHA, said progress on the AHSP funding is “appreciated” but was critical of “how much of a genuine uplift it will represent”.

He said: “However, a closer look at the Spending Review shows that much of the increase is back-loaded towards the end of the period.

“Once construction costs, inflation, labour shortages and regulatory pressures are taken into account, funding in the early years of the programme appears broadly flat in real terms.

“This risks slowing delivery at precisely the point when we need to accelerate the building of affordable and social homes.” 

Mr Meade reiterated calls for double this funding, £8.2bn, over the next Scottish parliament along with a “radical overhaul” of the housing system.

David Bookbinder, director of the Glasgow and West of Scotland Forum of Housing Associations, said the increase “is to be warmly welcomed in a Budget where tough decisions had to be made”.

But he also highlighted potential roadblocks in the plan, stating: “We do, though, note that the increase in capital expenditure, which is what funds new social rented provision, is nearer to 5%.

“If we estimate current average grant to be around £140,000, the capital budget of £762m would fund around 5,400 homes, so we’ll need to be realistic about what can be achieved against the estimates of new rented homes actually needed.

“With a multi-year programme now set out, we very much hope that momentum with the programme will steadily increase as we move away from the stop-start cycles of recent years, but ultimately that will be down to the new administration’s priorities in the years ahead.”

Alison Watson, director of Shelter Scotland, also claimed the budget “doesn’t do enough” to change the “too slow” delivery of new social housing in Scotland, highlighting the more than 10,000 children in the country who are homeless and living in temporary accommodation.

She said: “On the face of it an additional £34m for social housing, compared to the most recent Budget, is a step in the right direction – but it is not enough.

“The extra money will only deliver 36,000 affordable homes by 2030 – more than 26,000 short of where they say they would need to be to deliver their promise of 110,000 affordable homes by 2032.

“The new parliament will need a new approach and new money to deliver the social homes needed to reduce homelessness.”

Lori McElroy, chair of the Existing Homes Alliance, which campaigns for energy efficiency improvements to the country’s housing stock, said that while they welcome ongoing support for residents to upgrade their homes, this “remains a drop in the ocean” given the scale of the need.

She added: “Scotland has excellent fuel poverty and energy efficiency programmes such as Warmer Homes Scotland, area-based schemes and the Social Housing Net Zero Heat Fund, as well as generous grants through the Home Energy Scotland Grant and Loan Scheme, but the gap between what is needed and what is currently being delivered is wide.

“This Budget, as it stands, is a missed opportunity to significantly scale up these programmes which would reduce fuel poverty, improve public health by tackling damp and mould and prepare the workforce and supply chains needed to deliver our climate change targets – supporting thousands of jobs and economic opportunities across Scotland.”