Crippling climate for housing associations

The Scottish Government targets to address the cost-of-living crisis are having a major knock-on effect on Registered Social Landlords (RSLs).

The freeze

RSLs carry out a vital role in providing affordable and comfortable housing for Scotland’s least well-off and most vulnerable.

Last September, RSLs – including housing associations and other social housing groups – were hit with Scottish Government legislation that froze both public and private rents in response to high inflation and its impact on tenants. While these measures will end in April for social housing landlords, the six-month freeze is causing hardship for a sector already carrying huge financial burdens.

Unintended consequences

While the legislation to freeze rents aims to protect lower income families, it inhibits RSLs from investing in new, affordable homes, which are desperately needed across Scotland. Recognising this shortfall, the Scottish Government set a target for 110,000 new affordable homes to be built by 2032 – a pledge that can only be met through investment from housing associations and other RSLs.

What’s clear is this: new home building can only be carried out if RSLs have the funds to do it. It’s little wonder the Scottish Federation of Housing Associations (SFHA) warned of the unintended consequences of this legislation prior to it being rolled out.

Huge investment

Before the rent freeze, the Scottish Government introduced energy efficiency standards requiring all rented social housing to achieve a minimum of a ‘B’ rating by 2032. Aimed at protecting the environment, the legislation’s impact on RSLs is significant. It means they must invest huge sums – at least £2bn according to the SFHA – to achieve this target.

These factors, combined with other current economic issues, like the inflation-driven rise in employee costs, are now crippling many RSLs. Organisations are facing a situation where they are unable to invest to help address the housing shortages or to improve their housing stock to make it more energy efficient.

The Scottish Government needs to find a solution.

Vital support

Part of the solution lies in providing more funding. But there are other areas where the Government could support RSLs to survive in the current climate. These include:

  • Allowing greater flexibility in planning processes.
  • Offering more incentives in brownfield site development to support the required increase in new builds.
  • Developing apprenticeship programmes to support the workforce for energy efficiency measures to be quickly rolled out.

This support is vital for RSLs. As there’s no escaping the scale of the investment needed to provide homes for the poorest in our society and achieve Scotland’s green ambitions. If you’d like to know more, contact Stuart Beattie, Head of Social Housing.