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 the event that terms and conditions in the offer of grant can no longer be met (for example, where the recipient can no longer make the houses affordable for the agreed affordable period; where the properties fail to be managed and/or maintained to a suitable standard; the agreed allocations policy is no longer being followed etc.), this would result in full repayment of the grant (known as clawback) to the Scottish Government. 

Cost overruns

Funding of cost overruns will only be considered in exceptional circumstances where costs are deemed unavoidable and unforeseeable. We will fund cost overruns only as a last resort and expect all other sources of potential funding to be exhausted. 

Consideration may be given to providing an additional contribution towards the funding of unavoidable and unforeseeable costs which may be identified following offer of grant. However, there can be no guarantee that we will fund cost overruns and if we do, it will only be a contribution, e.g.  in the same proportion as the original grant to private finance split.

Any cost overruns must be notified to the Scottish Government as soon as they become apparent, together with an initial estimate of cost. This will enable immediate discussions to take place on the actions proposed by the organisation to mitigate the effect of the cost overrun, thereby offsetting, or eliminating the potential additional funding requirement. 

Organisations must demonstrate to the Scottish Government’s satisfaction that the additional costs have not resulted from their deliberate actions and that they could not reasonably have been foreseen. 

In addition to an immediate notification as outlined above, a formal, written request for approval of additional grant must be made to the Scottish Government, at the practical completion stage of the project. All information necessary to evidence the reasons for the cost overrun and assess the request should be attached to the submission 

The Scottish Government will take the final decision on whether cost overrun requests are acceptable based on the evidence provided.  

Progress reports 

Throughout the duration of the project, progress reports will be required by the Scottish Government.  The Scottish Government will specify the frequency and format of reports. 

Confirmation of reported progress – site visits

Responsibility for satisfactory completion of projects and the quality of the housing rests with the grant recipient.  However, to ensure that projects are proceeding in the manner approved, the Scottish Government (or chartered surveyors employed by the Scottish Government) may also wish to inspect progress on site.

Post completion assessment

When projects have reached completion, the Scottish Government will conduct an assessment to determine the physical and financial outputs from the projects.  The scheme assessment will involve:

  • Confirmation that the project is complete and that the completed housing is consistent with what was agreed for grant purposes; and
  • Confirmation that the conditions in the offer of grant have been met, in so far as they can be at this point.

To enable the Scottish Government to conduct a post completion assessment, all grant recipients will be required, as a condition of the offer made, to submit a ‘Project Completion Return Form’ within 28 days of the last property being let or sold.

For a sample of projects, the Scottish Government may also conduct a more detailed evaluation to determine the project’s success in meeting the objectives defined.

Monitoring and evaluation

Grant recipients of the Main Fund will be asked to complete (as a minimum) an annual return to the Scottish Government confirming progress on the delivery of the project; and that the terms and conditions of the grant are being complied with. For example the rents are in line with the assumptions at grant approval stage (i.e. they are being rented affordably), the houses are still being provided to the intended client group, or the properties are being managed and maintained appropriately and to the required standards. All successful applicants to the Main Fund will be required to prepare a short case study upon completion of their project.  This will be used by the Scottish Government to promote the RIHF and share with future potential applicants

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