Highland Council has underscored the pressing need for 24,000 new homes to be built over the next ten years. This ambitious target is driven by the necessity to alleviate a long-standing shortage of affordable housing and to accommodate the anticipated influx of workers filling the 8,400 new jobs expected from the Inverness and Cromarty Firth Green Freeport initiative.
Despite the current rate of construction, reaching this goal within the stipulated timeframe seems daunting. At the present pace, it would take more than two decades to build the required number of homes. Consequently, the council estimates an additional investment of approximately £2.8 billion is necessary to expedite the construction process.
National Housing Emergency
This call to action aligns with a broader national context. The Scottish government declared a national housing emergency in May, a move aimed at formally recognising the systemic issues plaguing the housing sector across the country. In response, Highland Council, along with other local authorities, has been vocal about the housing challenges unique to their regions.
Highland councillors have already initiated measures to address these issues. They have committed to developing a comprehensive housing challenge action plan by the end of the year, a strategic blueprint that aims to meet the 10-year housing target.
Strategic Objectives and Financial Solutions
Council officials have outlined potential strategies to achieve this ambitious housing goal. They believe the local authority’s financial contribution to the project is feasible within “anticipated, planned budgets.” The report highlights that meeting the challenge of constructing 24,000 homes within a decade is attainable if several strategic objectives are realised.
Historically, the council has maintained a steady pace of building over 500 affordable homes annually over the past decade. However, to meet the new target, innovative funding mechanisms must be explored.
Innovative Funding Mechanisms
One of the proposed solutions involves addressing the council’s substantial housing debt. Officials suggest that writing off the council’s £365 million housing debt could significantly free up investment capital, which could then be directed towards increasing the number of affordable homes. A considerable portion of this debt is historical, inherited from former district councils prior to the local government reorganisations of the 1990s. This debt is linked to housebuilding programmes that catered to demand from the hydro-electric and North Sea oil and gas industries.
Highland Council has reached out to key figures in the UK government to discuss the possibility of partially writing off this debt. In May, a formal request for a meeting was sent to the Levelling Up, Housing and Communities Secretary. A similar appeal has been made to the Deputy Leader of the Labour Party.
Exploring Pension Fund Investments
In addition to addressing historical debt, Highland Council is exploring alternative investment avenues. Pension funds have emerged as a promising potential source of investment. The council’s report notes that pension fund managers are generally keen to invest in housing due to its low-risk, long-term sustainability. Initial discussions with a private sector pension investor have been promising, with further talks planned to delve deeper into their investment strategies and appetite.
The Role of the Green Freeport
The Inverness and Cromarty Firth Green Freeport could also play a significant role in funding housing development. Announced in January, this freeport is designed to attract businesses through tax incentives and lower tariffs. A Japanese subsea cables company has already revealed plans to establish a factory in the freeport area, underscoring its potential as an economic catalyst.
The council estimates that the freeport’s non-domestic rates concession could generate an estimated £550 million over the next 25 years. However, officials caution that this potential funding could face competing demands, such as investments in roads and schools, which are equally critical for the region’s development.
Future Developments and Challenges
The need for affordable housing in Highland is undeniable, and the urgency to address it has never been more pronounced. With strategic planning and innovative funding solutions, the council aims to overcome the significant challenges posed by this ambitious target. The next few months will be critical as Highland Council develops its housing challenge action plan and engages with key stakeholders to secure the necessary investments.
As the council moves forward, the successful implementation of these strategies will be crucial in not only addressing the housing shortage but also in supporting the economic growth anticipated from the green freeport initiative. The Highland community and its leaders are poised to tackle these challenges head-on, working towards a future where housing needs are met, and economic opportunities are fully realised.
