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Scottish government picks two housing associations for £22m bond funding
The Scottish government has allocated £22m to issue two new bonds to housing associations.
The investment, made via Scotland’s Charitable Bond programme, will issue the bonds to Link Group and Cairn Housing Association via finance intermediary Allia.
Link has received a bond valued at £16m, while Cairn has secured a bond worth £6m. According to the Scottish government, the funding will support 150 new homes in total.
Funding had already been set aside for the two new bonds, but this week’s announcement confirmed they would be given to Edinburgh-based Link and Dundee-based Cairn.
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Scotland’s Charitable Bond programme has run since 2014. It provides unsecured loans of up to 15 years to social landlords to construct new affordable homes. The Scottish government reinvests the interest into the affordable housing budget.
Charitable Bonds are an ‘ethical investment product’, where the margin usually paid as interest to the bond holder, tax or profit to shareholders, is instead released as grant funding.
This latest extension means the total number of bonds issued has increased to 40 and the total investment to more than £482m.
Miles Briggs, a Conservative MSP, said the £22m in funding was “not new” and “a drop in the ocean” compared with the £200m cut from the affordable housebuilding budget in 2024-25.
It came after the SNP-led Scottish government avoided defeat in a vote on 2 October on whether it had failed to tackle the country’s housing emergency.
Anas Sarwar, leader of the Scottish Labour Party, put forward the motion, which was debated by MSPs. It was defeated by 60 votes to 54, with eight abstentions.
Ministers were forced to declare the emergency earlier this year as a result of increased pressure on housing supply, and high rates of homelessness.
Paul McLennan, the Scottish housing minister, said: “Tackling the housing emergency requires bold thinking, and investment in Charitable Bonds is another tool we can use to increase investment in our affordable housing budget while also allowing social landlords to access vital funding to build new homes.
“This has been a successful model in the past, but is reliant on financial transaction funding from the UK government. This funding, which is vital in housebuilding, has been cut by 62% since 2022.
“While we are demonstrating what we can do with the devolved powers and levers we have, it is vital that the UK government reverses that cut so we can increase investment in the affordable housebuilding sector.”
Peter Freer, director of debt capital markets and head of Allia’s Scottish office, said: “These two bond issues demonstrate the ongoing success of the Charitable Bond programme.
“With the Scottish government’s investment in the bonds, Allia has been able to provide Link with additional funding to support its significant development programme and make our first loan to Cairn Housing Association.
“Both organisations are providing much-needed new affordable homes, and we look forward to continuing our work with the Scottish government to create more positive impact across Scotland.”
