There are surely few in the world of affordable housing who have not welcomed the news that a further procurement round under the National Housing Trust Initiative for Developers has been launched by councils in Aberdeen, Dundee, Edinburgh and Fife.
In the world of affordable housing and new build development the National Housing Trust is now familiar to many. Launched in 2010 and a brainchild of the Scottish Futures Trust, it unlocks the development potential of land owned by house builders as well as stimulating economic growth through maximising public funding by levering in private investment.
It is generally regarded as a success. Prior to this latest procurement round, called NHT 2B, contracts had already been signed with developers to deliver more than 1,000 new homes for rent, with around 400 Scottish tenants already enjoying the benefits of the scheme. The NHT is a shining example of what the SFT set out to achieve; to deliver efficiency and additionality in infrastructure projects. By bringing together private developers and their funders with local authorities and the social housing sector, affordable housing supply is increased and the construction industry is supported.
But possibly a more subtle aim of project delivery is achieved and one that sociologists (and it's not often that lawyers stray into that territory) might describe as a paradigm shift in behavioural thinking. This is that the structure of the NHT scheme represents a re-assessment of and focus on outcomes by both public and private sector partners. In other words, whilst the universal goal of NHT is the delivery of affordable homes for mid-market rent, the framework which allows this has been designed around the needs of each party; the developer, the developer's funders, local authority, managing agent, and the Scottish Government. So far as possible risk is mitigated at each stage in the project for each of the stakeholders.
But it is important to recognise that the NHT Initiative is not meant to be a panacea for the crisis in housing supply. It is just one scheme which participating Councils can use to support housing delivery.
For NHT to operate, it requires a specific set of underlying circumstances to co-exist; for instance there needs to be a developer with access to land whose security does not exceed 70% of the valuation of the completed homes; these homes need to be constructed in geographical areas which can support mid-market rent; the developer needs to be prepared to take a more hands-on role post completion of the homes in the running and operation of the new delivery vehicle which takes ownership of the properties, and the exit strategy can be uncertain, predicated as it is on future market conditions.
But NHT has proved to be adaptable.
In response to feedback, the original NHT Scheme has altered to reflect the changing needs of parties and the changing market conditions. In particular the NHT for RSLs (registered social landlords) Variant, launched by the Scottish Government to support new build within the RSL sector, is now attracting support amongst RSL developers with supportive funders keen to take advantage of the Scottish Government guarantee offered directly to the RSL. Similarly, the NHT Variant for Councils has now been issued and it is hoped that more councils will be able to join the NHT 2B scheme. Together with other initiatives, like mortgage to rent, mortgage to shared equity, empty homes refurbishment and virtual or real development vehicles, we believe that NHT represents the best of innovative thinking and partnership working in the housing sector.