The Scottish Government subsidises the cost of affordable housing through the provision of grant funding. Most of this subsidy is awarded to housing associations and other Registered Social Landlord’s – like local authorities. In 2010/11 out of £471M funding for housing just £5M (1%) was allocated for the development of rented housing by providers other than RSL’s. And in recent years the amount of funding from the Scottish Government for housing has fallen sharply.

Communities planning to develop affordable housing for rent have two sources of possible funding: a new version of the Scottish Government Innovation Fund (not available at 01.04.14)  and Second Homes Council Tax funding, from their local council.

Second Homes Council Tax

Since 2005 local authorities have been able to reduce the council tax discount available to second home owners from 50% to 10%, with the extra money being used to support affordable housing. Local authorities are permitted to use this funding to enable the development of housing by community organisations (as well as RSLs, individuals (through RHOGs), the private sector and the council itself).

“This letter provides further detailed guidance and gives the additional facility to allow these funds to:

  • buy off-the-shelf houses from private developers for affordable housing use;
  • be used to support revenue expenditure related to the delivery of agreed housing activities; and
  • be disbursed to other organisations and individuals beyond Registered Social Landlords (RSLs) and Councils.”

From Council Tax – revised guidance on second homes and long term empty properties – 5 February 2009 FINAL.doc

Priorities for the use of Second Homes Council Tax are set out in the local authority Strategic Housing Investment Plans (SHIPs), which is decided by the council in conjunction with partners such as the local housing associations.