A new survey has revealed £200 million of affordable housing projects are at risk.
The Scottish Federation of Housing Associations claimed supply of new homes by housing associations and co-operatives, the main developers of new affordable housing in Scotland, is being put at risk by Scottish Government plans to slash capital investment in house-building.
Following a members’ survey, the federation revealed that at least £200 million worth of housing projects due for approval during the coming financial year are set to stall under the new funding arrangements.
That means at least 1600 homes ready to build across Scotland are at risk due to lack of funding.
The federation has warned that, under the terms of the recently-announced Innovation and Investment Fund, capital grant per house is being cut so much that it might become impossible for many housing associations and co-operatives to build affordable homes.
The total cost of a new, quality affordable house built to the required standards is approximately £120,000.
Until now, housing associations and co-operatives could secure government support of £66,500 per house, or £70,000 in rural areas.
Associations raise the balance of finance through borrowing from banks and other institutions and the cut in subsidy from £66,500 to £40,000 per house makes borrowing from banks harder and more expensive and means rents may have to go up.
In addition only £20 million is available for associations to start projects this year, when the federation would usually expect at least £100 million.
The total affordable housing budget for 2011-12 has been cut by 30%, one of the biggest cuts in the Scottish budget.
Most of the budget is earmarked for existing spending commitments.
There has been a drastic drop in new houses being built this year and the federation predicted a further drop if the proposed new £40,000 grant rate is enforced.
It is calling for politicians seeking to form the new Scottish Government to commit extra money allocated by Westminster to affordable housing.
Chief executive Dr Mary Taylor said, “With 250,000 Scottish households on waiting lists and construction companies warning of difficult times ahead, we can’t afford for new social housing developments to stall.
“Housing associations have a track record of producing quality, energy-efficient housing which suits local needs and we can’t sacrifice that.
“Unless more funds are made available, we will lose valuable expertise, economic activity and employment opportunities, as well as homes.”
She added, “Around £112 million of extra funding will be available to Scotland as a result of the UK budget and we would like to see this directed to ensure that affordable housing projects currently at risk can go on site.
“This would help redress part of the massive cut to capital housing projects in the 2011-12 Scottish budget.”