A shortage of affordable land in Inverness coupled with dire market conditions have forced Highland Council to scale back its housing investments.
The council agreed in 2021 that it would build 660 new affordable homes every year from 2022 to 2027.
That ambition is set out in its Strategic Housing Investment Plan – SHIP.
However the SHIP has hit choppy waters and had to change course.
Instead, the council is now aiming for 500 new houses a year, but admits that could reduce if budgets get squeezed further.
Council and private developers hit by economic crisis
When Highland Council approved the SHIP at the end of 2021, it was confident it could deliver 660 new affordable homes every year.
These would include 70% for affordable rent and 30% for intermediate affordable housing – that’s low cost ownership or mid-market rent.
However, a new report for the housing and property committee shows the council has fallen behind.
In the financial year 2022/23, the council got tenders approved for 520 units. It completed 525 new builds.
The report states: “The affordable housing development programme has been constrained by many issues outside the control of the council or housing association partners.”
Land is a big challenge. In Inverness, Nairn and some parts of Skye, the council can’t find building sites that are economically viable. There’s also a problem with some landowners deciding not to sell, or unexpectedly large costs for things like land decontamination or drainage.
Even when developers can get a site, they’re often hit by delays. Planning permission, roads changes and Scottish Water consent all slow down progress, though the council says it’s working with colleagues to tackle this problem.
Inverness school woes hit housing programme
In Inverness, there’s a bigger issue. Highland Council says ongoing school capacity issues have delayed or prevented some new housing developments.
Where developers do get the green light, the cost of developer contributions can make new housing estates “unviable”, the council says.
In the current economic crisis, developers are having to watch their margins. In Inverness and the Inner Moray Firth, most developments are secured through Section 75 agreements, but private house building is dependent on a strong market.
Where projects do go ahead, developers have been hit by huge cost inflation and a shortage of contractors.
Highland Council says some of its tenders receive just one or two bids. It’s also tackling the climate change emergency by investing in its existing housing, which reduces the pot for new builds.
However, the council is setting out a new plan.
£240 million housing programme
On 27 April, the housing and property committee will consider a new SHIP.
The updated investment plan is based on a £240 million Scottish Government grant for the next five years. In the financial year 2023/24, the government has committed to funding Highland Council to the tune of £46.428 million.
With this, the council hopes it can deliver 500 units a year, still with the 70/30 affordability ratio.
However, a report for the committee warns that changes to the plan are likely. The new strategy includes criteria to help councillors decide how to prioritise projects if resources change.
The housing and property committee will consider the new SHIP at its meeting later this week.
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