Rural and Islands Housing Fund: Guidance note MHDGN 2021/02

Guidance note relating to applications to the Rural and Islands Housing Fund which contains updated information for applicants since the original fund was launched in 2016.

In November 2020, the Scottish Government announced the continuation of the Rural and Islands Housing Fund (RIHF) beyond March 2021 as part of its Affordable Housing Supply Programme. Up to £30m is being made available as part of the affordable housing programme to support this demand led scheme.

This guidance provides general advice to assist potential applicants to either the Feasibility Fund and the Main Fund. It explains why the Scottish Government is asking for a range of information and supporting data and explanations to accompany applications.

The guidance cannot anticipate the needs of all potential applicants to the RIHF. If applicants need further information about how to interpret or apply this guidance when completing an application, or if you have any general queries about the fund, please email We will aim to respond to queries within five working days, although this may take longer in the case of complex queries.

Applicants should be aware that the Scottish Government may publish updates to this guidance or related information from time to time. Feedback and any questions from potential applicants will be used to guide the need for clarification of existing information.


Rural Scotland is an integral part of our country's economy, environment and culture. The Scottish Government recognises that good quality, affordable housing is essential to help attract and retain people in Scotland’s remote and rural communities and also that building affordable housing in rural areas presents different challenges than urban areas.  

The diversity of rural Scotland underlines the fact that housing policy needs to be able to respond to local circumstances and that different interventions may be required in different places.  While Housing to 2040, Scotland’s first long-term housing strategy, recognises the challenges and diversity of housing delivery in rural areas, it also recognises the significant and generational impact that a small number of additional homes can make to the long term resilience of rural communities.  

There are some significant differences in the housing market of rural Scotland:

  • Landowners play a more significant role in provision of local housing for rent.
  • There is less speculative building being done in comparison to urban areas.  
  • Second home and holiday homes affect local markets and put the cost of housing outwith the reach of many local people.
  • There are generally higher levels of empty properties.
  • There are high levels of part-time working, affecting mortgage decisions and rentals.
  • Delivering mainstream affordable housing solely through RSL or local authorities is not possible. 
  • Delivery is hampered by high infrastructure costs, suitable land and generally higher transport costs.


The primary aim of the RIHF is to further increase the long term availability of affordable residential housing of all tenures in rural Scotland. This means, for example, providing support to:

  • increase the supply of new build houses for affordable rent or sale.
  • increase the number of rural empty properties brought back into use for affordable rent or sale.
  • facilitate conversion of commercial and non-domestic properties for residential use, where appropriate.
  • facilitate delivery of mixed tenure, or mixed use sites (for example residential and commercial), where communities identify that as appropriate for their needs.

The vision behind the RIHF is based on additionality and it provides an additional funding route for those not able to access traditional affordable housing funding to deliver affordable housing in rural areas.  The additionality it seeks to achieve includes:

  • helping the publicly funded housing system to achieve additional, but more widespread  and equitable, outreach in the delivery of affordable houses of all tenures to rural communities.
  • increasing the supply of affordable housing chances in communities where it is demonstrably needed, but less likely to be delivered by mainstream affordable housing providers.
  • empowering communities to take deliver additional affordable housing supply. 
  • testing innovative and practical housing initiatives which deliver replicable solutions to the challenging aspects of affordable rural housing supply.
  • maximising and increasing value for money by supporting projects which deliver additional affordable housing through joint ventures and/or seeking out new and additional sources of funding.
  • demonstrating the benefits of genuine partnership working between local communities, landowners and experienced housing enablers and providers.

Communities will be at the heart of all of the projects funded.  This is in line with the Scottish Government’s commitment to our communities being supported to do things for themselves – community empowerment – and to people having their voices heard in the planning and delivery of services – community engagement and participation. 

The Feasibility Fund will provide support for those at an early stage of project development to assist them in developing robust, fully evidenced applications to the Main Fund. It is intended to fill gaps in the provision of existing feasibility support.  

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