New Colonsay homes ‘at risk’ without local authority loan

Councillors are being asked to approve a loan of more than £400,000 to help with the delivery of affordable housing on Colonsay.

A development at Scalasaig is being delivered by Colonsay Community Development Company (CCDC) in partnership with Communities Housing Scotland.

But the project is described as being “at risk” due to changes in the financial climate which has altered the private sector loan element of the development’s funding package.

The full council will now be asked to authorise a loan of £445,000, in line with a council policy which has existed for over 10 years, at its full meeting today (Thursday June 29).

Executive director Kirsty Flanagan said: “As the strategic housing authority for Argyll and Bute, the council has a statutory duty to assess the need and demand for housing in the area and to ensure that any unmet need for housing is addressed through the Local Housing Strategy (LHS) and the Strategic Housing Investment Plan (SHIP).

“The island of Colonsay has been identified as a priority in the LHS and SHIP and continues to exhibit relatively high levels of need and demand, and significant imbalances in the local housing system.

“An affordable housing need and demand has been identified on the island of Colonsay and has had representation in the council’s Strategic Housing Investment Plan (SHIP) since 2014.

“There are around 100 homes on the island, of which 30 per cent are deemed ineffective in terms of meeting local needs, ie as at April 2021, 28 are second/holiday homes and a further three are empty/long term unoccupied.

“Argyll Community Housing Association and West Highland Housing Association currently provide 10 properties for social rent; which amounts to only 10 per cent of the total dwelling stock or 14 per cent of the occupied stock.

“This is well below national levels and indicates a potentially imbalanced housing system with scope for further growth in the Registered Social Landlord (RSL) sector.”

Ms Flanagan added: “Since the inception of the development and business plan production for the Scalasaig affordable housing some years ago the financial climate has changed.

“As such, certain assumptions no longer hold true and it has therefore been necessary to explore alternative options to find a more viable funding model for the development.

“Arrangement fees and servicing a commercial loan in the current climate is going to be a strain on the viability of the project. CCDC require Argyll and Bute Council to offer development finance for a period of up to 12 months.

“This type of facility has been made available by other local authorities in support of community-led housing developments, is therefore not without precedent, and will sit comfortably within Argyll and Bute Council’s policies and aspirations in relation to protecting fragile communities and encouraging repopulation in the region.”

‘Since the inception of the plan for affordable housing...the financial climate has changed.’