I was very interested to see the announcement last week of a project involving 50 affordable rented homes in Dunbar – billed as “Scotland’s first affordable rented homes built without government subsidy”.  The search for new models which can allow affordable homes to be made available with minimal public funding - and ideally with minimal public sector exposure (whether in the form of guarantees or otherwise) – has been a feature of the housing scene in Scotland for some years. The Dunbar project is a great example of what can be achieved, where you have a group of willing partners who are prepared to be flexible, to think creatively, and to take a new step on (relatively) uncharted territory.

I say relatively uncharted, as the key features within this model are immediately recognisable from other initiatives of this kind – the use of an investment lease structure to provide an institutional investor with a long-term reliable income stream (thus releasing relatively low-cost capital finance); the need to access risk finance from a different source to cover the construction phase; engagement of the local authority (in other cases, it would be a housing association) to provide management and maintenance services; and (I would assume, given technical issues regarding the type of tenancy) with a special purpose vehicle acting as the immediate landlord of the residential tenants. It should be noted, incidentally, that the “no-subsidy” element relates only to the 50 mid-market rent units; the 10 units for social rent will be supported by Scottish Government AHSP funding – so that nut remains to be cracked.

The Scottish Futures Trust has applied real energy and drive in taking forward a range of new housing models in recent years - the NHT local authority variant, LAR Housing Trust, the Edinburgh Living LLPs, the Affordable Home Ownership model and various innovative structures for financing of infrastructure – each of them contributing towards the Scottish Government’s ambitious target for affordable housing. Each of these models has provided a different solution to the same fundamental problem - how to provide affordable housing in a challenging public finance environment; and, as a legal adviser working on each of these projects, I can also say that each has come with its own set of technical legal challenges to resolve.

But the Dunbar project throws out a challenge to the private sector – given the shared interest in creating balanced and sustainable communities, is it time now for the private sector to apply its own creativity and innovation to explore new ways to facilitate provision of affordable housing in a tight public funding environment ….seeing this not as a burden imposed by planning policies but as an opportunity? If student residences and PRS schemes are now established as sound long-term investment propositions, what are the solutions within the field of affordable rented housing (mid-market, or maybe even social rented housing) which could make them attractive with minimal or nil subsidy? Watch this space!