Housing Minister Kevin Stewart MSP has announced the launch of a Rental Income Guarantee Scheme (RIGS), to boost new investment in private rented housing.
Developed in consultation with the sector the scheme, which is the first of its kind in the UK, will reduce some of the risk to investors in the emerging build-to-rent market.
RIGS guarantees 50% of any gap between actual and projected rental income of a development, providing greater certainty of income for investors and landlords during the initial letting years.
Mr Stewart said:
“RIGS are a unique scheme to this emerging sector. As the first of its kind in the UK, the SNP Government is clearly demonstrating our commitment to the private housing sector.
“This scheme will help deliver new, high quality private rented homes, which are modern, energy efficient and professionally managed. It does so in a way that provides assurances for investors, ensuring good commercial practice and the incentive to let these homes.
“RIGS are just one part of our More Homes approach to increase housing across all tenures, with potential to attract £500 million of investment and support delivery of around 2,500 new, high quality private rented homes. It shows that Scotland is open for business.”
Nicola Barclay, Chief Executive of Homes for Scotland, which led the SNP Government commissioned project on how to expand the Build to Rent sector, added:
“The RIGS will provide investors with greater confidence during the early development stages, when letting risk is likely to be highest. It is just one of the levers the SNP Government has put in place to help boost a tenure which has such an important part to play in meeting the diverse housing needs of our growing population.”
Commenting, Kenneth Gibson MSP said:
“As well as the significant investment and development opportunities on offer, expanding build-to-rent will help increase choice, flexibility and affordability for tenants. Most importantly, it can transform the customer experience of the private rented sector through the delivery of new high-quality, purpose-built and professionally-managed accommodation.”
RIGS opened for applications from 12 October and is managed by the Scottish Futures Trust on behalf of the SNP Government.
RIGS forms part of a wider package of support for the Build-to-Rent market, which includes:
Recent new Planning Delivery Advice on Build-to-Rent
A Comparative Tax Advantage in Scotland – with tax relief on multiple dwellings, with an exemption on the Additional Dwelling Supplement (not available in England)
A modern tenancy system, set to be introduced in December 2017
Commissioned by the SNP Government, Homes for Scotland has also published a new ‘Opportunity Document’ which sets out the key features of the Scottish build-to-rent sector and highlights the opportunities of Build-to-Rent in Scotland to attract this new investment. The document is available here.