Budget boosts affordable housing investment, but sector warns measures still fall short

Unveiling the 2026/27 spending plans at Holyrood, Robison said the package, framed as a budget “for Scottish families”, includes record investment in new affordable homes, with at least 70% of funding directed towards social rent. The budget also sits within a wider £200bn investment envelope across the Spending Review and Infrastructure Pipeline.

However, despite the headline commitments, housing bodies, homelessness charities and industry groups warned that the measures fall significantly short of what is required to address Scotland’s escalating housing emergency.

Sector welcomes long‑term funding but warns of “back‑loaded” investment

The Scottish Federation of Housing Associations (SFHA) welcomed the multi‑year commitment but cautioned that the spending profile risks slowing delivery at the very moment acceleration is needed.

SFHA chief executive, Richard Meade, said: “The Scottish Government’s draft Budget confirms a continued commitment to affordable housing, with £4.1bn in public funding for the Affordable Housing Supply Programme over four years, and this progress is appreciated.

“However, a closer look at the spending review shows that much of the increase is back-loaded towards the end of the period. Once construction costs, inflation, labour shortages and regulatory pressures are taken into account, funding in the early years of the programme appears broadly flat in real terms. This risks slowing delivery at precisely the point when we need to accelerate the building of affordable and social homes.

“We need to see an £8.2bn commitment over the course of the next Scottish Parliament, alongside a radical overhaul of the housing system, if Scotland is to build the 15,693 affordable homes it needs to respond effectively to the housing emergency. We will continue to make the case for greater investment in affordable housing in Scotland so that everyone can have a safe, warm affordable home.”

CIH Scotland director Gillian McLees said the uplift to £925.87 million in 2025/26 for the AHSP is welcome but insufficient to meet the government’s pledge of 110,000 affordable homes by 2032.

“The increase provides a commitment to building capacity within the sector and continuing to deliver homes that will help to tackle homelessness, reduce poverty and create communities where people can thrive,” she said.

“However, it’s becoming increasingly clear that the Scottish Government is not on track to meet its own target of delivering 110,000 social and affordable homes by 2032. If this is to be realised, significant increases in future budgets will be required.

“CIH research, commissioned jointly with Shelter Scotland and SFHA, identifies the need to deliver 15,693 social and affordable homes each year supported by £1.64bn per year through the Affordable Housing Supply Programme. (Yesterday’s) budget, although increased, does not meet this and shows there is still some way to go to provide the social and affordable homes Scotland needs.  

“While this is the case, the continued financial commitment to the Ending Homelessness Together fund including Rapid Rehousing Transitions Funds is vital in tackling the ongoing housing emergency. We urge the Scottish Government to continue investing in homelessness services while working towards developing the detail on the new homelessness prevention duty.”

GWSF director David Bookbinder also called for realism about what can be achieved.

“The overall 14.6% increase in the 26-27 Affordable Housing Supply Programme is to be warmly welcomed in a Budget where tough decisions had to be made,” he said.

“We do, though, note that the increase in capital expenditure, which is what funds new social rented provision, is nearer to 5%. If we estimate current average grant to be around £140k, the capital budget of £762m would fund around 5,400 homes, so we’ll need to be realistic about what can be achieved against the estimates of new rented homes actually needed.

“With a multi-year programme now set out, we very much hope that momentum with the programme will steadily increase as we move away from the stop-start cycles of recent years, but ultimately that will be down to the new administration’s priorities in the years ahead.”

Home builders “frustrated” by lack of detail

The Budget’s broader housing measures, including £66m in Financial Transactions for housing and rhetoric around “new hope for young Scots”, were met with frustration from the private sector.

Homes for Scotland chief executive Jane Wood said the Budget missed an opportunity to introduce bold initiatives to stimulate construction at a time when home‑building levels are “at or near historic lows”.

“It was extremely encouraging to hear the cabinet secretary for finance talk of ‘new hope for young Scots looking for their first home’,” Ms Wood added. “The budget document itself also emphasises ‘all-tenure’ ambition and details £66m in Financial Transactions for housing. However, the lack of detail on what this will mean in practice is extremely frustrating.

“With home building levels now at or near historic lows, the only feasible way out of the housing emergency is to build significantly more homes across private and social sectors. Key to this is confidence for both new and existing investors, on which we have been working closely with the Scottish Government but I am afraid today appears to be a missed opportunity to announce the bold initiatives that we believe would significantly stimulate construction.

“Support for first time buyers (previously provided by the First Home Fund) is absolutely fundamental. It remains to be seen whether this will be forthcoming to give young people the hope the Budget statement alluded to.

“As we approach May’s election, we urge all parties to come forward with policies which deliver the homes Scotland needs.”

Timber Engineering founder Eddie Wighton said the government had “missed a significant opportunity” to prioritise housing of all tenures.

“Scotland is facing a national housing emergency, yet some local authorities still have their heads buried in the sand,” he added. “The industry is ready to mobilise, but meaningful momentum cannot be gained without government support. In some cases, this means additional funding (such as in social housing delivery), in others, it requires policy change. It’s time to pull out the defibrillator and revive affordable housing. Families of all tenures desperately require homes that are genuinely affordable.

“The government must also look more closely at the way that the rental market is managed. Small changes, including ensuring that housing benefit contributions are paid directly to landlords, would reduce the immediate risk of tenant homelessness and strain on temporary accommodation. Placing housing development on behalf of local authority onto an open tender system would also deliver better value for money to taxpayers.

“Improving the planning system would remove an enormous barrier, as would more zoning for housing in Local Development Plans. However, unless these standards are not locked in for a significant period – 10 years would be my preference – then there is little chance of increasing housing output.

“Separately, the government’s proposed Building Safety Level Bill represents a fast-approaching crisis for SMEs. Companies that have had no involvement in high-rise buildings with legacy combustible cladding issues will effectively be asked to subsidise the larger companies responsible for the debacle. When SMEs are being squeezed with employment, energy and material costs, alongside the cost of finance, regulation and compliance, this could be the straw that breaks the camel’s back.”

Call for stronger measures to end homelessness and fuel poverty

Crisis Scotland bemoaned the budget for failing to recognise the importance of investing in ending homelessness as part of its ‘cost of living package’ or in its child poverty measures.

Head of policy and communications Maeve McGoldrick said: “While we welcome the Scottish Government’s commitment to invest in new affordable homes, this alone is not enough to end homelessness. The failure to prioritise and invest in prevention means that more people will be pushed unnecessarily into the trauma of homelessness, with councils remaining under increasing pressure trying to cope with demand via so-called temporary solutions, further fuelling the housing emergency.

“What’s more, failing to invest further in the national roll out of Housing First means that those in the most vulnerable situations won’t get the housing support they need, once again forcing more people into the trauma and indignity of rough sleeping and homelessness.

“If the Scottish Government wants to truly end homelessness, it must match its ambition with action. We need dedicated investment in support services to help people keep their homes and avoid homelessness in the first place. A lack of dedicated funding will undermine the success of the new prevention duties in the Housing Act.

“As we approach the Scottish election, it’s crucial all political parties commit to ending all forms of homelessness in Scotland by 2040 and create a nation where everyone has a safe and secure home. Only with long-term strategic investment in both housing and preventative support services will this become a reality.”

Shelter Scotland director, Alison Watson, added: “Social housing delivery in Scotland remains too slow, too little and too late for the more than 10,000 children homeless tonight. Today’s budget doesn’t do enough to change these facts.

“Shona Robison’s budget was an opportunity for ministers to put their money where their mouth is. On the face of it, an additional £34m for social housing, compared to the most recent budget, is a step in the right direction - but it is not enough.

“The extra money will only deliver 36,000 affordable homes by 2030 – more than 26,000 short of where they say they would need to be to deliver their promise of 110,000 affordable homes by 2032.

“The new Parliament will need a new approach and new money to deliver the social homes needed to reduce homelessness. Homes that the government promised, that academics say we need but for which there is still no credible plan to deliver.

“We must be honest about the real costs of failure. Failing to build the social homes we need means rising homelessness, rising child poverty, rising costs for councils, health boards and the taxpayer.

The Existing Homes Alliance (EHA) described the budget as a missed opportunity to reduce fuel poverty.

The coalition welcomed some promising support for homeowners, including increased funding for energy efficiency and decarbonisation – up to £335m, increased funding for the Fuel Poverty Advisory Panel (14%), increased Child Winter Heating Payment (3%), pension Age Winter Heating Payment (29%) and Winter Heating Payment (7%).

Although, chair Lori McElroy said it leaves a lot to be desired in scaling up energy efficiency programmes that can meaningfully impact Scottish fuel poverty rates. 

“While we welcome the ongoing support to help homeowners, landlords and tenants to make their homes warmer, healthier and more affordable to heat, this remains a drop in the ocean when we have over 800,000 households living in fuel poverty and 44% of Scotland’s homes falling below Energy Performance Certificate band C,” Lori added.

“Scotland has excellent fuel poverty and energy efficiency programmes such as Warmer Homes Scotland, Area-based Schemes and the Social Housing Net Zero Heat Fund, as well as generous grants through the Home Energy Scotland Grant and Loan Scheme, but the gap between what is needed and what is currently being delivered is wide.

“This budget, as it stands, is a missed opportunity to significantly scale up these programmes which would reduce fuel poverty, improve public health by tackling damp and mould, and prepare the workforce and supply chains needed to deliver our climate change targets – supporting thousands of jobs and economic opportunities across Scotland.”

Landlords and property sector ‘left disappointed’

The budget confirmed two new council tax bands for homes over £1m, effectively a Scottish “mansion tax”, coming into force by 2028. There was also no change to LBTT rates, despite repeated calls for reform, and rising income‑tax thresholds for lower and middle earners. But the sector warned that uncertainty remains.

Scottish Association of Landlords chief executive, John Blackwood, said: “Scotland’s landlords will be disappointed by this budget, in particular by the Finance Secretary’s refusal to rule out the 2p increase on income tax gained from property that we’ve seen elsewhere in the UK.

“That this tax may come into effect in 2027-28, subject to a legislative consent motion, will cause further uncertainty within Scotland’s private rented sector.

“While we do welcome that there will be no rise in the LBTT additional dwelling supplement, this budget still feels to us like a missed opportunity.

“Rather than continuing on this path, Shona Robison should say unreservedly that increases in tax on property income will not happen and give the sector some much-needed confidence to invest.”

Timothy Douglas, head of policy and campaigns at Propertymark, said: “Despite a multi-year commitment to affordable housing supply and increased investment in acquisitions and homelessness prevention, it is surprising that the Scottish Government are yet again failing to tackle the housing emergency, and the Budget misses an important opportunity to address the growing tax burden on housing.

“Land and Buildings Transaction Tax continues to act as a barrier to people moving home and to investment in the private rented sector, which can help bring down the cost of renting. The Housing Investment Task Force was clear that property tax should be reviewed to support housing supply and economic growth, yet this has not been meaningfully addressed, and additional levels of council tax brings yet more disparity in pricing and costs across the property sector.

“At a time of acute housing pressure, Scotland needs policies that encourage mobility and investment across all tenures. Without this focus, the current property tax regime does not encourage people to move, right size or relocate for work, while also deterring landlords from investing in much-needed rented homes. Furthermore, the Scottish Government miss out on the economic boost through increased transactions and spending in the wider economy.”

David Melhuish, director, Scottish Property Federation, said: “Today’s Scottish Budget offers some welcome specific support for retail, hospitality, and leisure ratepayers in light of this April’s business rates revaluation and provides phased increases for other ratepayers. There is also welcome stability on the rates and thresholds for the Land and Buildings Transaction Tax (LBTT).

“However, for the real estate sector the challenges of development viability will remain largely untouched by today’s budget statement and without the economic uplift achieved by investment in our urban centres we remain concerned that Scotland’s growth will continue to stagnate.

“Furthermore, investors will be particularly disappointed that the Reserved Investor Fund LBTT relief has not yet been delivered, despite extensive engagement with experts seeking a level playing field with the rest of the UK.

“Though we do welcome the boost in investment for the affordable housing budget and for targeted infrastructure support for city growth projects. Overall, it will be important for the Scottish Government to work closely with UK and local government partners to maximise the benefits of regional and city growth deals.”

Iain Murray of Bidwells said the Budget sends a clear signal on revenue‑raising through new high‑value council tax bands but lacks measures to accelerate housing delivery.

Build to Rent can deliver homes at pace, he said, but requires stable policy, faster planning, and infrastructure funding to unlock consented schemes.

DJ Alexander CEO David Alexander said the Budget represents “more of the same short‑termism”, failing to address stagnation in social housing delivery.