Scottish Government housing policy is again under fire after a social landlord said it was stopping future developments because of rising costs.

Harbour Homes, formerly Port of Leith Housing Association, is warning that the rent freeze and rising costs mean that new projects are not financially viable.

Group chief executive Heather Kiteley confirmed it was halting developments in an email to its 108 staff, some of whom now face redundancy or shorter working hours.

She said: “Harbour Homes costs have continued to rise, although at a slower rate than in 2022/23, and this has been reflected in tender prices for new housing development.

“Rising costs, high interest rates, procurement issues and restrictions on our ability to increase rental income in line with inflation have made it impossible for future developments to demonstrate financial viability when assessing them. The price of private finance has also risen significantly since we last approached the market.

“As a result of the ongoing impact of these challenges, we have taken the difficult decision to cease our development programme. This decision will unfortunately have an impact on the future of our development team.

“We are currently consulting with team members and working to find suitable alternative roles, where possible, elsewhere in the organisation.”

Harbour Homes has operated since 1975 providing affordable housing in Leith and north Edinburgh. It has invested about £210m in providing more than 3,000 properties.

Will Scarlett, founder and director of Scarlett Land and Development, said government ministers had to listen to the growing problems in the sector.

“The viability of new build homes is multi faceted but one of the biggest challenges to viability in Scotland is entirely self-imposed,” he said. “Rent control is a voluntary impingement on project viability.”

He added that the list of concerns expressed by Ms Kiteley also apply to private built-to-rent and affordable housing.

“If it’s not viable, investors and developers will simply not invest. Scottish Government must listen to the sector or face an end to large scale development of rental homes,” he said.