High Loan Debt Rules Highland Council Out of House Building

Highland Councillors have stressed their wish to build council houses again. However, they say that it does not make financial sense at this time to take part in the Scottish Government’s initiative to encourage new council house building.

Meeting in Inverness today (Wednesday), the Housing and Social Work Committee underlined its commitment to increasing housing supply in the Highlands to meet the recognised demand and concluded that it is more cost effective to provide affordable housing via housing associations than to engage in the Government’s scheme at this time.

Members were told that until the Council’s high loan debt is reduced it cannot make a business case for taking part in the Government’s initiative as it is currently structured. The subsidy level available with the current Scottish Government scheme would, at best, cover about 20% of the cost of new build supply in the Highlands. By comparison, the average housing association grant subsidy available for the equivalent new build housing association property for rent would be nearer 70%. 

Councillor Margaret Davidson, Housing and Social Work Chairman, said: “It’s a real disappointment that we are unable to undertake new council house building in the Highlands at this time. The sums do not add up.

“We know that our communities and tenants want us to build council houses again. We will assure the Scottish Government that the Council is committed to increasing housing supply in the Highlands, and that includes a very real enthusiasm for new Council provision. Unfortunately, given the other issues we face in terms of housing debt, we simply cannot construct a workable business case on the current subsidy levels involved. I will be seeking to have a cross party meeting with Scottish Government Ministers to discuss the possibility of different funding arrangements that could support new council housing in the Highlands.”

The Scottish Government has made £25 million available nationally to support new Council house building within existing council borrowing rules. Councils were invited to bid for a share of the fund – with bids to be assessed against a number of criteria.