Sector ‘wary’ as report says for-profits should be allowed in Scotland

However, it said permitting for-profits in Scotland would be “the single biggest intervention that would attract more mobile private capital to affordable housing”.

Paul McLennan, Scotland’s housing minister who has just stepped down, said the report’s recommendations would be taken forward.

The Chartered Institute of Housing Scotland said: “We are wary about models that may risk increased financialisation of the sector, which in turn would mean higher long-term rents for tenants.”

The organisation said it would like more information “on the risk/ benefit of a for-profit provider of affordable homes in Scotland before we are convinced of its merit”.

It added: “Scotland has a successful structure for the delivery of social and affordable housing. The challenge is that funding from the state is increasingly not covering a proportionate share of the costs.”

Sally Thomas, chief executive of the Scottish Federation of Housing Associations, said the current model was a “tried-and-tested formula”, where private finance supplemented housing associations’ funding beyond what they receive from the government.

She added: “Private finance alone cannot end the housing emergency.

“What we need to see is a long-term funding plan for social housing, with public money combined with private investment, as would be the case for other types of critical infrastructure essential for the functioning of the country.”

The concerns echo those raised by Kate Henderson, chief executive of the National Housing Federation, earlier this year over the situation in England. She told a committee of MPs in January that for-profit providers were not “the answer to the social housing crisis”.

In Scotland, for-profit providers have previously tried to register with the Scottish Housing Regulator, but were refused.

The HIT report also backed the Scottish government’s plans to exempt build-to-rent (BTR) and mid-market rent homes from rent controls.

It said the exemptions should be “delivered urgently” and the BTR market should be a “priority” for Scotland.

The report recommended that social landlords should be allowed to offer mid-market rental homes as part of their “core operations”.

The report also called for housing to be recognised as “critical infrastructure”, as part of a “long-term commitment to a minimum level of funding for new affordable housing supply”. Scotland’s Building Safety Levy should be “managed to minimise impact on pipeline and viability”. 

The authors also recommended that the government should write off Housing Revenue Account debt to “provide immediate capacity for new supply” for councils.

It said the law should be changed to “open up new opportunities for partnerships and a commercial shared-ownership model for home buyers”. Mr McLennan welcomed the taskforce’s report and said the recommendations were being taken forward as part of the Programme for Government.

He said the government would “work in partnership with taskforce members and other organisations to grow investor confidence to support the delivery of more homes across Scotland”. 

Mr McLennan said his aim was to make Scotland the “best place for housing investment”. 

Among the taskforce’s members were representatives from lenders and investors Legal & General, NatWest and Lloyds Banking Group, as well as house builder Taylor Wimpey and housing associations Wheatley and Places for People.