Affordable Housing Supply Programme (AHSP) - Deliverability Review

Progress to date and key delivery challenges

Progress to date

Statistics on progress towards the Scottish Government’s affordable housing delivery target are published on a quarterly basis. At the end of December 2024, 26,039 affordable homes had been completed towards the target, representing 24% of the delivery target already being achieved in the first two and three-quarter years. In terms of tenure, these completions consisted of 19,945 (77%) homes for social rent, 3,644 (14%) for affordable rent, and 2,450 (9%) for affordable home ownership – full analysis of homes delivered in 2024 to 2025 is not yet complete but of the 21,092 homes delivered to end March 2024, over 4,100 of these homes are in rural and island communities representing circa 20% of all homes delivered.

Statistics to end of March 2025 are due to be published on Tuesday 24 June 2025.

see notes below as 2021 to 2022 and 2024 to 2025 both contain partial year data

Important Notes:

1. Financial year 2021 to 2022 figures exclude the completion numbers that relate to the previous target ^[2]

2. Financial year 2024 to 2025 figures includes April to June (Quarter 1 2024 to 2025), July to September (Quarter 2 2024 to 2025), and October to December (Quarter 3 2024 to 2025) data only

Supply challenges

Since the affordable homes target was set, the delivery landscape has been subject to significant disruptive socio-economic uncertainty and macro-economic shocks. In addition, the 9% capital allocation cut and 62% financial transaction cut in 2024 to 2025 by the previous UK Government led to reduced allocations for the Affordable Housing Supply Programme in 2024 to 2025.

The most impactful factors have included:

• Brexit and associated dislocation, in particular its impact on labour supply. Worker shortages have consistently been more widespread in the Construction sector than in the economy as a whole^[3]
• the disruption to building material supply chains due to Covid-19, compounded by the Russian invasion of Ukraine. This had led to shortages of certain materials as well as significant inflation, with price inflation for materials used in new housing reaching 24.0% in June 2022. While price inflation has moderated to 1.0% in January 2024, the average level of material prices is nearly two-fifths (37%) higher than in January 2020^[4]
• the impact of the lockdown on non-essential construction during Covid: across the period Quarter 2 (April to June) to Quarter 4 (October to December) 2020, Affordable Housing Supply Programme completions were down by 43% on the same quarters in 2019.^[5] As a result, the completion of the previous Affordable Housing Supply Programme target and the start date for the current 110,000 target were delayed from 31 March 2021 to 23 March 2022
• Consumer Price Index (CPI) inflation, which reached 11.1% in October 2022.^[6] This has left households having to make difficult choices despite the range of government support that has been available to mitigate the impacts of the crisis and enable people to stay in their own homes
• the sharp rise in interest rates by the Bank of England to address inflationary pressures, which is reflected in Public Works Loan Board and private finance rates, making it more costly to finance the portion of build costs not met by Scottish Government grant
• impacts on the financial viability of maintenance contractors and house builders from the Covid-19 disruptions and subsequent economic and financial pressures
• freezes to the local housing allowance (LHA) rates. The previous UK Government froze LHA rates for three years which independent analysis by Crisis has shown was the most significant barrier to local authority efforts to prevent or relieve homelessness. While LHA rates were restored to the 30th percentile from April 2024, the current UK Government then froze rates in 2025-2026, widening the gap between housing support for private renters and real-world rents. The LHA rate should cover the bottom 30% of rents in a given area as an absolute minimum. Research from the Resolution Foundation estimates that permanently repegging LHA rates to the 30th percentile of local rents would lift 75,000 children out of poverty by the end of the UK Parliament

These challenges were raised during stakeholder engagement workshops and explored in survey responses. A range of other concerns, suggestions and issues were also raised during the stakeholder engagement undertaken as part of this Review. The following sections detail the feedback received and the actions proposed to support ongoing delivery against the context of this difficult backdrop.