THE quest to build tens of thousands more affordable homes in Scotland and reduce massive waiting lists has been boosted by a promise of £44 million.

The cash, which goes some way to reversing Scottish Government cuts in recent years, will increase the grant for every new council and housing association property by £16,000 and is expected to accelerate a programme of house building.

It comes days after ministers scrapped right-to-buy of rented council properties, claiming it was necessary to protect access to socially-rented properties and address waiting lists approaching 400,000.

Nicola Sturgeon confirmed the decision on a visit to Queens Cross Housing Association in Glasgow.

That announcement was met with claims the Government's target of 30,000 new affordable homes by 2016 would crash and burn unless there was a U-turn on cuts to housing grants awarded to councils and social landlords.

In recent years, the grant-per-unit has been cut from £70,000 to £42,000, with the average cost of building a socially rented home at around £125,000. Even with borrowing powers, housing associations are left with shortfalls.

But on the same day that a new report will recommend introducing higher subsidy levels to councils and social landlords, ministers are announcing a new figure or £57,000-per-unit grants. The Government said the increase partly reflected financial pressures stemming from welfare reforms.

The report recommending the increase states: "Registered social landlords now face many financial pressures not foreseen in 2010 (when the subsidy was reduced).

"These include potential increased costs and lost income through Welfare Reform, a growing pensions deficit, the effects of the VAT increase in January 2011, and other priorities, including commitments to enhance the quality and energy efficiency of existing stock.

"Many associations cannot build social rented units without additional subsidy coming in from other sources. Social rents do not support private borrowing to supplement the current £42,000 grant level.

"The financial impact of welfare reform is creating tremendous pressure on councils' financial resources. Many councils also have major commitments to invest in the quality and energy efficiency of their existing stock. For many councils, current subsidy levels are a significant stumbling block to future development of affordable housing."

Deputy First Minister Nicola Sturgeon said: "We are aware of the pressures being faced by councils and housing associations, and support the recommendations of the working group in full, including increasing subsidies by £16,000. Housing is and will remain a priority for this Government and today's announcement of £44m funding brings our total budget for affordable housing to nearly £900m in over three years. The resources announced today will strengthen our commitment to provide high quality, sustainable homes."

COSLA president Councillor David O'Neill said: "It will create greater confidence among councils to plan for a sustainable new build social housing programme and provide a boost to local economies and employment opportunities."

Susan Torrance, who represented the Scottish Federation of Housing Associations on the working group recommending the increase, said: "These measures will enable us to build with the right level of subsidy to ensure rents remain affordable to those working in low paid jobs and on low incomes."

The grants are broken down by local authority areas and range from a £330,000 increase for Orkney to £5.6m for Glasgow.

Edinburgh will get an overall subsidy hike of almost £2.5m, Argyll and Bute £1.8m, Aberdeen City £1.5m, Aberdeenshire £2.2m and Dundee £1.37m. the Highlands will receive a £3.5m increase, North Lanarkshire £2.5m, Fife £2.6m and South Lanarkshire £2.2m.