Housing associations have long been campaigning for more support to help them build desperately-needed social housing.
The need is undisputed. The Scottish Government itself has a target of building 30,000 affordable homes by 2016, with nearly 400,000 people on council waiting lists.
However, claims from ministers that they are committed to house-building have been viewed with scepticism by members of the housing association movement since 2010, when the amount of subsidy on offer for each new home built was slashed. The cash is needed to help meet the gap between what an association has to borrow to build and how much can be underwritten by rental income.
A fall from around £85,000 in 2007, to £70,000 in 2010 and a benchmark of £42,000 per home now, has hamstrung many housing associations, given that the average cost of delivering a new home is around £125,000.
Solutions are limited. Increasing tenants' rent is one option, but an unpalatable one. You only have to look at the survey published by Glasgow's Queens Cross Housing Association last week – which found 70% of its residents are living in poverty – to see that increasing rent quickly makes homes unaffordable for some. Increasing landlords' debt levels is equally unsustainable with large numbers of housing associations now so loaded with debt that new development has become impossible.
So increasing subsidies by £16,000 a year, in line with the report of a working group set up by Housing Minister Margaret Burgess, has been welcomed. Warnings that Government targets were sure to be missed appear finally to have convinced ministers change was needed. The consensus from both councils and housing associations is that they will now be able to submit potential developments to the Government, with affordable rents maintained. Craig Sanderson of Link Group said his organisation would now be able to bring forward new projects which it simply couldn't have done before.
He also praised the Government for ensuring social rents remain affordable in a way that has been all but abandoned in England, where rents charged by landlords are now considerably above those here. This can contribute to a benefit trap, with tenants who find jobs unable to take them because new salaries are often not high enough to meet their rent.
Not all are happy. One leading housing association chief told me the impact would be limited. Pressures from welfare reforms are ongoing and some housing associations would like to provide one-bedroom properties to help those penalised for having a spare room in their homes. But smaller homes attract a smaller subsidy and may still be unaffordable.
Another problem is one of simple capacity. Some associations have allowed staff with development expertise to leave in recent years.
Overall, however, the mood is one of "suck it and see". The Scottish Government's funding pledge should ensure that its targets are now met. But the longer-term impact on affordable housing remains to be seen.
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