How does NHT work?
New build homes are procured from developers, and when a bid from a developer is accepted onto the initiative the developer will complete the homes on their site to agreed standards and timescales. Limited Liability Partnerships (LLPs) are being set up to oversee progress on each developer's site within a Council area - these are companies which won't have any staff, but have a board of management involving the relevant developer and Council and a representative of the SFT. Once the homes are completed, the LLP will buy them by paying between 65 and 70 per cent of an agreed purchase price to the developer upfront. This contribution is funded by participating Councils who will provide loans to the LLPs in their area - Councils are likely to fund this by borrowing from the Public Works Loan Board. The remaining 30 to 35 per cent is contributed by the developer as a mixture of loan funding and equity investment.
The homes are expected to be available to tenants for affordable intermediate rent for five to 10 years and the developer will oversee an agent(s) who will manage the homes and carry out maintenance and repairs to agreed customer service standards. The managing agents will allocate homes to tenants based on criteria agreed with the Council.
Each LLP's income from tenants' rents will be used to pay interest to the Council so it can finance its own borrowing for the initiative and will also pay interest on the loan from the developer and pay for agents responsible for managing and maintaining the homes. The Scottish Government will provide a guarantee to participating Councils that it will step in if there is a problem and the LLP is unable to pay what it owes to the Council.