On Wednesday 3 April Shelter Scotland hosted a very well-attended roundtable event reflecting on approaches to delivering alternative tenures. There were three very interesting presentations followed by a lively roundtable discussion. Dr John Boyle (Rettie & Co.) reflected on the small but growing Build to Rent market in Scotland, Dr Richard Jennings (Castle Rock Edinvar) shared his experience of delivering mid-market rented homes and Douglas Cochrane (UK Finance) considered the challenges in funding alternative tenure models.

A strong theme to emerge was the need for a housing system that would work for all in the longer term. Owner-occupation, social housing and the open-market private rented sector would continue to play a part. But there were noted to be important gaps. Private rented accommodation is often poor quality and expensive. It does not provide security of tenure and is therefore unsuitable as the longer term option now needed by households – including those with children – who have modest incomes but are unlikely to be a high priority for the stretched social housing sector and who are not able to afford owner-occupation. There was argued to be a need for affordable housing to be delivered at scale for this sizable group.

The Build to Rent market aims to cater for more affluent households – perhaps who have previous experience of living in high-quality purpose build student accommodation – but who are not ready to buy a home, or are still saving for a deposit. Managing whole, high amenity blocks allows for high standards of management and recently completed developments have demonstrated strong potential demand, confirmed by the faster recent growth of this sector in England.

The imaginative ways in which mid-market rent is being funded was striking. A huge range of packages involving grants and loans from the Government, sweating existing assets, raising private sector loans, creating cross-subsidy within developments, and of course, tenants’ contributions from rents are being brought together to provide below market-rent homes that are well-managed and maintained, with the aspiration to create stable and sustainable communities. Discussion suggested that this variety can be a strength as provision can be tailored to suit the great variety of local circumstances, although tenants and potential tenants may not have a clear idea of the options that might be available. It was also noted that there are advantages in having some stability in the funding models rather than a constant stream of new initiatives that may have different conditions attached – again long-term, stable solutions are sought. There was argued to be potential for growth across the mid-market sector, as investors – such as pension funds – come to recognise that good quality rented housing can be a safe investment providing steady returns. Although, of course, there has long been the argument that there is potential for institutional investment in the PRS.

A key constraint is that much affordable rented housing is intended to be accessible to those entitled to housing benefit. But local housing allowance is set within broad market areas and is too blunt to respond to the differences in market contexts within areas and across Scotland. In areas where rents and the LHA are low, it is simply impossible to make new development mid-market rent stack up financially. In other cases, rents may be low compared to a very local area (e.g. within a popular city centre location) but because the LHA reflects rents across a broader area it is too low to enable financial viability of mid-market rent. These questions raise real issues as to how and at what scale ‘affordability’ should be defined.

Returning to the questions of what a ‘fixed’ housing market would look like in the long term, there were interesting reflections on how value for public money is best achieved and evaluated in the housing sector, through the life of the house and its occupants. Owner-occupation promises reduced costs in old age and, typically, very few housing-cost calls on the public purse. Options which allow households to acquire some equity, through shared ownership or equity sharing for example, also provide an asset that may be used to offset some costs in old age. Providing housing above social rent potentially creates demand for long-term higher subsidy contributions, perhaps for many years past retirement. At present decisions around funding packages, including from Government resources, are made in the moment, with an eye to how a development or acquisition can be made to work immediately, while these longer-term questions can get lost.

It was heartening, though, to hear the many ways in which the challenge of providing sufficient affordable housing is being met with innovation and enthusiasm.

• Professor Moira Munro is Scotland knowledge exchange lead for the UK Collaborative Centre for Housing Evidence

This article was originally published on the CaCHE website.