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.

Which organisations can apply?

Applications to the RIHF must come from incorporated bodies (which includes all incorporated companies and Scottish Charitable Incorporated Organisations) and partnerships but not individuals or loose associations of individuals (e.g. certain types of club).

Some examples of eligible organisations are development trusts, housing trusts, community interest companies (CICs), community benefit societies (BenComs), Scottish Charitable Incorporated Organisations (SCIOs), social enterprises, private landowning bodies, letting companies, private developers, local authorities, and Registered Social Landlords (RSLs).

Local authority and RSL applicants must clearly explain why they are applying to the RIHF instead of the mainstream Scottish Government Affordable Housing Supply Programme (AHSP). They must also demonstrate that the project would deliver additional housing to that delivered through the AHSP and they will be expected to deliver up to published AHSP benchmarks. If a project can be delivered via the AHSP, the application will be diverted to that programme for support.

Local authority and RSL applicants cannot apply for higher levels of financial support from the RIHF than is available through the mainstream AHSP.

Collaboration between organisations in order to share expertise and resources is strongly encouragedespecially where it can be demonstrated that it provides clear long term benefits for the local community or where better value for money can be achieved by sharing or combining resources. 

 If a funding application involves a consortium or another form of Special Purpose Vehicle, then the applicant must confirm a nominated lead applicant. The lead applicant for a collaborative project can be a local authority or RSL

We will not fund organisations that are in poor financial health or those that have had a previous funding from us that has not been managed satisfactorily

Organisations which have already received funding for their project from a local authority via the AHSP will not be eligible to apply to the RIHF for additional resources.

Types of projects

The RIHF aims to increase the long term availability of permanent affordable residential housing in rural areas of Scotland.  We are looking for applications that can meet this objective.

Proposals must be for residential development and must become a primary residence.  We will not fund development of holiday homes.

All applications must be for new projects.  Applications where building work has already started will not be accepted.

Projects can include building new houses, refurbishing or renovating empty houses, or can seek to convert commercial or non-domestic premises into residential accommodation.

We want to build a catalogue of newer case studies and successful applicants will be required to submit short case studies to the Scottish Government which will be shared with future applicants.

Conditions relating to existing properties

Existing houses subject to an application should normally have been empty for at least six months at the point the application is submitted. There must be an expectation that the house would remain empty long term without additional funding support being made available. In addition, houses subject to an application should not currently be in a state of repair suitable for letting at the time the application is submitted i.e. they do not currently meet at least one aspect of the Repairing Standard or require other works to bring the property to a standard where a tenant would be willing to rent it.

 For applications relating to commercial or non-domestic properties where the proposal is to convert for residential use, these properties do not have to be empty or in disrepair when the application is submitted. However, the applicant must explain why the property is not currently suitable to provide residential accommodation.

For all property, applicants can include costs associated with the purchase of the property as part of their overall proposal. Please note, however, that the RIHF will not fund acquisition of property in isolation – the purchase of land or property must be part the overall project. If the project has already received a contribution to property purchase costs via another Scottish Government Fund (e.g. the Scottish Land Fund) no further funding towards acquisition costs will be provided under the RIHF. .

Local authorities and RSLs cannot apply for funds to renovate their existing housing stock, but they can apply for funds to renovate commercial or non-domestic properties to convert for residential use. Other bodies can apply for funds to renovate properties or buildings they already own. But neither they, nor social landlords, will normally be eligible for funding where any Scottish Government or other public sector funding has been provided at any time in the past 20 years to support the construction or renovation of any of the properties which form part of the application. An exception to this would be houses which have been sold under Right to Buy but there may be other cases.

Potential applicants are advised to discuss their ideas with Scottish Government if they do not fall within the broad categories set out above to get feedback on potential eligibility. Applications for tied-housing, speculative housing acquisition or housing for specific key workers or a specific employer will not be approved.

Project location

We have determined area eligibility using the Scottish Government Urban Rural Classification.  Projects will be eligible if they fall within classes 4, 5 and 6 of the 6 fold urban rural classification (see table below).

Code 1 – 6

Scottish Government 6 fold Urban Rural Classification

1 Large Urban Areas

Settlements of 125,000 or more people.

2 Other Urban Areas

Settlements of 10,000 to 124,999 people.

3 Accessible Small Towns

Settlements of 3,000 to 9,999 people and within 30 minutes’ drive of a settlement of 10,000 or more.

4 Remote Small Towns

Settlements of 3,000 to 9,999 people and with a drive time of over 30 minutes to a settlement of 10,000 or more.

5 Accessible Rural

Areas with a population of less than 3,000 people, and within a 30 minute drive time of a settlement of 10,000 or more.

6 Remote Rural

Areas with a population of less than 3,000 people, and with a drive time of over 30 minutes to a settlement of 10,000 or more.

Geographic location 

To identify the six-fold urban/ rural classification of a project, reference should be made to the National Records of Scotland Scottish Postcode Directory where the following steps should be taken:

  • Open ‘latest’ under the Scottish Postcode Directory files subheading       
  • Under the ‘Postcode Index and lookups’ section select ‘Postcode Index – Comma Separated Value (CSV)’
  • Open the ‘SmallUser’ excel file
  • Find the relevant postcode in column A – column BA gives the classification of the project as follows:

1 – Large urban area

2 – Other urban area

3 – Accessible small town

4 – Remote small town

5 – Accessible rural area

6 – Remote rural area

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