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Innovative financing

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

As part of the Housing to 2040 approach to deliver at least 110,000 affordable homes by 2032, we have established an Innovative Finance Steering Group (IFSG) which will provide strategic advice to the Scottish Government across the lifetime of the target, on opportunities for innovative finance models to support the affordable housing sector (e.g. RSLs and Local Authorities).

Examples of our initiatives

Supporting the delivery of mid-market rent (MMR)

MMR is a type of affordable housing where rents are higher than social rents but  lower than private rents. We continue to support the delivery of MMR through the mainstream grant funded Affordable Housing Supply Programme, as well as on going management of long term loans. Our £55 million loan to LAR Housing Trust has enabled them to attract an additional £65 million of private investment and our £47.5 million loan to Places for People Capital has enabled them to attract an additional £155 million of private investment, creating a total of £322.5 million to deliver more than 1,700 affordable MMR homes across Scotland.



Public Investor


Private/External Investor


Total £m

LAR Housing Trust  

Scottish Government


Scottish Widows via Bank of Scotland 




PfP Capital MMR Fund  



Scottish Government






Castle Rock Edinvar 



Nationwide Pension Fund 


Strathclyde Pension Fund  


Scottish National Investment Bank







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.

National Housing Trust initiative (NHT)

Developed in 2010, NHT used a guarantee-based model which guaranteed money borrowed by local authorities to help deliver affordable housing for between 5 and 10 years, supporting developers and wider economic activity during the financial downturn.  

It made an important contribution of over 1,700 new affordable mid-market rent homes and is estimated to have helped unlock an investment package of over a quarter of a billion pounds over its lifetime.

The majority of these homes have now exited NHT with most having been retained within the affordable housing sector

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