National Housing Trust has the potential to jump start Scottish construction sector

19th August 2011

A partner in one of Scotland’s leading social housing law firms has said the Scottish Government’s National Housing Trust (NHT) initiative could be a lifeline for the country’s construction sector, following securing of funding for the first project under the new model.

Heather Pearson, partner and head of social housing and regeneration at law firm HBJ Gateley, advised developer Tweed Homes on the project, which will see the construction of 51 new homes in Galashiels

The project is the first of its kind to be secured under the NHT, which was set up to provide greater access to more affordable housing.

Heather Pearson said the Galashiels deal proved the ability of the NHT model, as one of several initiatives, to help the Scottish Government fulfil its affordable housing needs, with a positive knock-on effect for the construction sector.

She said: “Scotland’s construction industry has been under pressure for several years and so far there doesn’t appear to be any great cause for comfort on the horizon. However, the NHT is a novel way of accessing low-risk funding for new building projects which has the potential to encourage more activity in the sector.

“The project in Galashiels was relatively small but shows that it can be done, and has provided those of us who were involved with some food for thought around how we can make the process quicker and more efficient the next time.”

To get the project underway, Tweedside LLP was created as a joint venture by the Scottish Futures Trust. The partners in the JV were the Scottish Government, Scottish Borders Council and Tweed Homes, which will deliver and manage the new housing stock.

Some £6.25 million has been raised to finance the project. £4.05 million of prudential borrowing was provided by Scottish Borders Council, underwritten by a guarantee from the Scottish Government, and a further contribution of £2.20 million of private investment has been contributed by Tweed Homes. The construction phase of the project will be funded by the Clydesdale Bank.

Tweed Homes was the first company in Scotland to sign up to the initiative. To mark the occasion, the Scottish Government’s Minister for Housing & Transport, Keith Brown, opened the first site formally at Balnakiel in Galashiels on August 16.

A consultation exercise is now underway to build on lessons learned from the Galashiels project to streamline the process for future projects.

Heather Pearson said: “This is a genuinely innovative step in improving access to social housing at a time when access to funding is very tight and the entire construction sector is still stretched, so as NHT projects progress we could effectively kill two birds with one stone.

”This addresses a genuine need for affordable housing throughout Scotland and shows what can be achieved when the public and private sectors work together towards a common aim.”