Affordable Housing Supply Programme: process and procedures MHDGN 2022/02

This Guidance Note supersedes MHDGN 2020/02 and is for local authorities and Registered Social Landlords. It details the process for planning the delivery of the majority of grant-funded homes through the Affordable Housing Supply Programme.

Grant recycling

RSLs and local authorities may seek the Scottish Government’s consent to waive the right to recover grant when an RSL or local authority home(s) which has been previously grant funded for social rent becomes available for re-let and the RSL or local authority considers that:

  • there are now strategic reasons for not re-letting at a social rent, and
  • it makes strategic sense to (a) sell the home(s) on the open market for outright sale or shared equity or (b) convert the home(s) to mid-market rent.

To enable the Scottish Government to consider an application to waive the right to recover grant, an RSL or local authority should provide the following information:

  • the number, size, type, and location of the social rented homes concerned
  • the proposal for the homes, that is whether the RSL or local authority would wish to sell them or convert them to mid-market rent (including the reasons for selecting the proposed approach)
  • the estimated value of the grant repayment to be waived, and
  • the RSL’s or local authority’s proposal for reinvesting the grant into additional affordable housing supply.

Depending on the nature of the proposal, the Scottish Government will approve or reject the application[1].  Where consent is given, an RSL or local authority must then apply the confirmed value of the grant repayment that has been waived towards the agreed affordable housing supply project.  (The expectation is that the full amount of the grant repayment that has been waived will be allocated to the new project.  This means that the grant contribution that would have been offered on this project under the terms of the existing funding regime will be reduced by the amount of the waived repayment.) 

[1] Because receipts on disposals would otherwise have been repayable to the Scottish Government, decisions on grant recycling in Glasgow and Edinburgh will be the responsibility of the Scottish Government.  Both City Councils will however be fully consulted on all factors.

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