Scottish Government’s charitable bond scheme is raising interest for social housing
The Scottish Government’s £6.8 million investment in charitable bonds is to pay towards the construction of 80 new homes in Dumfries.
The “affordable” homes will be built by Dumfries & Galloway Housing Partnership (DGHP), with interest on the loan funding these properties eventually going to fund the construction of new social homes.
Charitable bonds are ethical financial products – no profit is taken by Allia, a social investment charity, which issues the bonds on the Scottish Government’s behalf. Allia has provided DGHP with a loan of £5 million.
“DGHP is delighted to be able to take part in the Scottish Government funded Allia bond programme,” said Zoe Forster, DGHP’s chief executive. “The loan we have just concluded will be invested in new build housing in Dumfries and Galloway, and will allow us to move forward faster than we had expected to meet the housing needs of our communities.”
The interest on the loan, around £1.8 million, will be converted into a charitable donation, which the Scottish Government will give to housing associations for the construction of new social housing.
This loan brings the Scottish Government’s total charitable bond investments to over £47 million, which is supporting the development of 661 “affordable” homes across Scotland, from Orkney to the Borders.
As a result of this investment the total amount of charitable donations generated for the construction of new social housing is now an additional £11 million.
"Providing good quality, affordable housing is a key priority for the Scottish Government. By investing in housing across the country we are also helping to attract and retain people in our rural communities,” said Scotland’s housing minister, Kevin Stewart.
“We have committed to deliver 50,000 more affordable homes over the next five years, backed up with investment of more than £3bn. [This] announcement marks another step on the road to delivering that pledge. Innovative financing schemes such as charitable bonds play a major role in helping us deliver this major expansion in housing supply. We invested £26.5 million last year and have committed to invest the same again this year and we remain the only Government in the UK to do so.
“Through these bonds we are also maintaining Scotland’s leadership in financial innovation, working with partners to deliver more for less public investment.”
Phil Caroe, director, Allia Impact Finance, added: "The Scottish Government's partnership with Allia is helping to accelerate the development of affordable housing across Scotland. This is now the sixth loan made under the current charitable bond programme, and with another round of loans lined up, we expect to deliver more than £50 million of investment into new affordable homes by the end of the financial year."