Pension Funds May Be Part of the Answer to Housing Crisis

Thursday, 07 October 2010 18:19

Pension funds may be part of the answer to funding badly-needed new affordable housing in Scotland, but not the whole solution.

The SFHA response to a speech by Housing and Communities Minister Alex Neil to the National Association of Pension Funds annual conference in Liverpool, in which he urged pension funds to invest in new build by housing associations in Scotland (1).

Housing associations and co-operatives are the main developers and managers of new-build affordable housing in Scotland, Currently, between 60-70% of the cost of a new-build home is funded by public subsidy, with the rest coming from private finance (2).

SFHA Chief Executive Mary Taylor said:

"The SFHA understands we are facing leaner times where public money is concerned, and the Minister is quite right to be exploring new options for attracting low-cost finance for affordable housing. We are pleased that the Minister recognises the urgent need for new affordable homes in Scotland, with over 250,000 families on waiting lists.

"However, private finance is only part of the equation for building a house - a reasonable level of public subsidy is essential in order to attract the private lending which Scotland's housing associations have been so effective in securing, adding value for every public pound invested.

"We need to continue to invest in building affordable housing in Scotland, not only to tackle need but also because of the jobs that will be created and the boost given to local economies due to the strong economic multiplier effect which house-building generates(3)."