Scottish housing minister: ‘We want to increase housing budget back to where it needs to be’

Holyrood has set aside an additional £80m for councils to acquire homes and turn them into social housing over the next two years, but the Scottish Federation of Housing Associations (SFHA) has pointed out this will not build a single new home.

Mr McLennan confirmed that the Scottish government’s target for 70% of homes delivered through the ASHP to be social rent is still in place despite the funding cut.

The Scottish National Party (SNP) minister has “a series of asks” for the next UK government after the general election on 4 July. One is reversing the 9% capital budget cut for Scotland. “If the new UK government reversed that 9% capital budget cut, the funding would go into housing,” he said.

Mr McLennan said he would ask for additional borrowing powers and lobby UK ministers to raise Local Housing Allowance to cover the 50th percentile of private rents and make sure it was not frozen again.

He said that shadow UK chancellor Rachel Reeves has talked about reviewing devolved government funding “probably in three months’ time after the election”.

Mr McLennan will also ask UK ministers for “the ability to award financial transactions again”. Financial transactions are funds that can be used to make loans or investments in private sector entities.

The SNP administration in Scotland declared a nationwide housing emergency in May. Mr McLennan said construction inflation, Brexit and asylum dispersal had put pressures on the country’s housing sector. “It’s probably been the perfect storm over the past few years,” he added.

He said he was working with colleagues across the Scottish parliament, and that the Housing 2040 strategy board would be meeting later this week to discuss a strategy to build more homes, maximise existing housing and combat challenges with temporary accommodation. 

Each local authority that has declared a housing emergency has been asked to produce its own local action plan as well.

After the SNP-Green Party coalition ended in April, Mr McLennan assumed full responsibility for the Housing Bill currently going through the Scottish parliament.

He said that the bill’s main themes – rent controls, tenants’ rights and homelessness prevention – are still “the right areas we need to be involved in”, but discussions with other parties were ongoing about the “structure” of the legislation.

“One of the key things is making sure we get the bill through parliament,” he stated. “It needs that political support, so those discussions will continue.”

The bill will have its first stage in the Scottish parliament “probably around the end of the year”, he said.

SFHA has warned that subjecting mid-market rent to rent controls, as the bill currently proposes, could render the tenure unviable for landlords. Mr McLennan noted that “housing associations have been clear on that” and that mid-market rent was “one of the key things we’ll be reviewing”.

He explained that when the bill was proposed, “the thinking of that was trying to protect tenants in mid-market rent, and it could be very different in different parts of Scotland”.

The minister said that his housing investment taskforce, which convenes housing associations, investors, local authorities and house builders, will report “towards the end of the year” with recommendations to make financing the sector “as flexible as possible”.

One option, he said, was for the Scottish government to provide “contingent liability, almost guarantees”, for social housing developments. “If you can negate some of the risk, then banks price in risk into what they can offer.”

Mr McLennan added that he is keen to work with the next UK housing minister. “In my time that I’ve been here, we’ve had four UK housing ministers… I’ve had five minutes with a government official, that’s all I’ve had, despite a number of requests.

“So the key is let’s work together. Can they help us in terms of what we’re doing, not hinder us?”