‘Super-aggregator’ could help Scottish landlords fund net zero push, report says
The Scottish government should consider launching a funding vehicle to help landlords pay for decarbonising their stock, a new report has said.
In an 80-page report, the Scottish Futures Trust, an arm’s-length company owned by the Scottish government, said a ‘super-aggregator’ could be established to “lever in” more private sector investment.
Under the super-aggregator model, a government-backed special purpose vehicle would manage and pay contractors to carry out retrofit work and then charge landlords a service fee.
This would cover capital repayments, finance costs, management and maintenance fees.
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“This essentially adds a further step removed between debt providers and landlords – potentially reducing individual landlords’ credit/financing considerations,” the report said.
“Characterising the payment as a service charge, rather than a debt service… would potentially avoid including the payment in existing financial covenants.”
Alongside this, the report warned that a manger for the super-aggregator could be difficult to find, although it said a consortium could be formed instead.
It pointed out that a normal financial aggregator could be established, partly funded by Scottish government capital and private loans.
However, the authors flagged that aggregators, such as The Housing Financing Corporation, already exist.
The proposals are included as part an over-arching recommendation for the Scottish government to “strengthen” the current Social Housing Net Zero Heat Fund.
Last year, the Scottish government put forward £200m for landlords to spend under the fund up until 2026.
However during the summer, Scotland’s acting minister for climate action was told the funding “doesn’t touch the sides”.
Toby Tucker, associate director at the Scottish Futures Trust, who led on the report, said: “Based on our analysis, the most likely model to succeed is the aggregator approach.
“This offers the opportunity to use public sector capital to lever in more private sector investment at a lower overall cost of finance, and ultimately provides an enhanced one-stop-shop support for both project development and financing of net zero installations.”
Sally Thomas, outgoing chief executive at the Scottish Federation of Housing Associations, said the report is “essential reading”.
She added: “Housing associations require funding solutions which allow them to significantly accelerate their retrofit projects at scale while not affecting rents, and we look forward to discussing this and the rest of the report’s findings in our continued engagement with the Scottish government.”
A spokesperson for the Scottish government said: “We welcome this report. Its findings and recommendations will help inform our thinking on how the Scottish government and the sector can work together and leverage in third-party financing to help achieve our climate targets."
They added: “The super-aggregator model is one option recommended for further exploration in the SFT [Scottish Futures Trust] report.
“The Scottish government has committed to supporting registered social landlords through the Social Housing Net Zero Heat Fund until March 2026. The fund will be reviewed and evaluated over the next 12 months and any decision to extend, enhance, or replace the fund will be communicated to the sector.”
