Special purpose vehicle set up
Unique funding model to build affordable homes
East Lothian Council worked with Robertson Capital Projects (RCP) and Ross Developments and Renewables to create an innovative delivery and funding mechanism that would allow the homes to be delivered using the council’s long term affordable rental income to underpin a private sector funding solution.
The homes are being provided for rent at mid-market rates without subsidy, funded using private sector investment, while a further 10 will be for social rent, funded using the council’s capital budget with Scottish Government grant support.
A special purpose vehicle was set up to acquire the land enter into a design with build contract with Robertson Partnership Homes to construct the homes. RCP is providing construction phase finance, with the SPV undertaking a range of project management services to ensure successful delivery of the new homes.
Coop Pension Fund, via its fund managers, PGIM, and partners 3H York are investing in the scheme. The Co-op will acquire and hold the 50 mid-market affordable homes as a long-term investment following practical completion and lease the new affordable homes to East Lothian Council.
All 50 properties will revert to council ownership at the end of the lease period at no cost to the council.
The first houses will be handed over in March 2019 for social rent. These new homes will be available to qualifying tenants initially from the council’s waiting list at initial rents for a two-bedroom terrace home at £508 per month.
The remaining properties for mid-market rent will be handed over in tranches through 2019 and 2020 as development progresses.
The council has used funding support from Scottish Government to deliver much-needed new socially rented homes with the innovative private sector funding model enabling the 50 mid-market rental homes in this case.
Finance Secretary Derek Mackay said: “This development demonstrates what can happen when the public sector and private sector work closely together.”
Since 2007, more than 1,500 affordable homes have been delivered in East Lothian, of which more than 700 are council homes.
Photo (supplied): Ken Ross, CEO of Ross Developments and Renewables; Cllr Jim Goodfellow, Council spokesperson for Housing and Community Wellbeing, East Lothian Council; and Neil McCormick, MD of Robertson Capital Projects