Innovative financing

We work with the public and private sectors to create innovative financing models to increase housing supply.

As part of the More Homes Scotland approach to deliver at least 50,000 affordable homes by 2021, we use innovative ways to help make the most of existing public funding and secure additional private sector investment.

This is to help developers, councils and housing associations get new affordable housing developments off the ground, and kick-start developments that have stalled.

Examples of our initiatives

Expanding the provision of mid-market rent

Mid-market rent (MMR) is a type of affordable housing where rents are lower than in the private market, but higher than social housing. We continue to support the delivery of MMR through the mainstream grant-funded Affordable Housing Supply Programme, as well as enable innovative funding solutions that build on the success of Scottish Government-supported schemes, such as the National Housing Trust initiative (NHT) and the Local Affordable Rented Housing Trust (LAR).

The MMR Invitation has concluded assessment of a number of proposals which had the potential to deliver affordable MMR homes at scale by 2021 backed by Scottish Government financial support and attracting significant private investment.

The Placemaking and Regeneration Group, Places for People have been successful in securing Scottish Government loan funding of £47.5m for their proposal, which will deliver 1,000 affordable mid-market rent homes.

Find out more about the proposal and read the news release.

Charitable bonds

The Scottish charitable bond model provides loans to registered social landlords for the development of new affordable homes, while also generating instant capital funds, in the form of charitable donations. These charitable donations are used as housing grant for the provision of new affordable housing.

Since 2014 the Scottish Government has invested over £260 million in 30 bonds, generating over £67 million in charitable donations.

The charitable bond programme is managed by Allia C&C, a social investment organisation.


In line with our private rented sector (PRS) strategy we are working with industry to create the right conditions to deliver new purpose-built homes for private rent at scale.

As part of this we have supported Homes for Scotland's Building the Rented Sector study focused on attracting institutional investment into Scotland's new-build private rented sector.

Local Affordable Rented Housing Trust (LAR)

LAR is a Scottish charity set up to provide long-term, mid-market rented housing in Scotland.

We have given LAR a £55 million loan facility. This is expected to be matched by private investment funding to bring total funding to over £100 million and deliver 1,000 homes.

House builders and developers, in partnership with LAR and councils, have been invited to get involved in delivering this affordable housing.

Find out more at on the Local Affordable Rented Housing Trust website and read the news release.

National Housing Trust initiative (NHT)

Under NHT, developers are appointed to build a specified number of affordable homes on land they already own.

Once complete, a local partnership company – made up of the developer, the participating council and the Scottish Futures Trust (SFT) – buys the homes and lets them to tenants at affordable, mid-market rent for a period of between five and 10 years, after which time they are sold.

We guarantee the money borrowed by councils to help fund development of the homes.

The success of the original model has led to the creation of variants, including a council variant and a variant for registered social landlords.

The original NHT model for councils and developers was developed in partnership with the SFT and lending institutions.

So far, deals have been secured with 17 developers for the delivery of over 1,600 homes across 10 council areas through this version of the initiative.

Over 1,000 homes are completed, with hundreds more in the pipeline across the country.

More information about the National Housing Trust is available on the SFT website.

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