The SNP Government has announced a new £50 million investment in charitable bonds to support the development of nearly 950 new homes over two years.
Charitable Bonds allow the SNP Government to raise investment through a bond issue at a fixed rate to a social housing provider, over five or 10 years, with a single repayment and rolled-up interest payable at the end of the loan term.
The bonds are ethical finance designed to provide registered social landlords (RSLs) with funding to build additional affordable housing.
With the rate fixed for the whole loans term, this gives RSLs certainty in relation to their financial commitment.
Said Kenneth Gibson MSP:
"These bonds provide a welcome new source of finance for housing associations to build around 750 new affordable homes, while interest on the loans provide grants for 200 more.
"This year's £25.6 million investment has resulted in £18.9 million in loans for new affordable homes being provided and more than £6.7 million in grant funding. A further £25 million is earmarked for 2016-17.
“Innovative financing schemes such as charitable bonds will play a significant role in supporting a major expansion in housing supply over the next parliamentary term.
“Between 2013 and end of March next year we will have supported the building of more than 1,000 homes by investing £62 million in charitable bonds, the only Government in the UK to do so. The bonds are ethical financial products that provide housing associations in Scotland with easily accessible development finance for new affordable homes.
“We exceeded our target of delivering 30,000 affordable homes in this Parliamentary term.
“Our ambitions go further though, which is why we have committed to building 50,000 more affordable homes over the next five years, backed by investment of more than £3,000 million."