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Highland Council declares a ‘housing challenge’ as it needs 24,000 homes in a decade costing up to £2.8 billion

By Scott Maclennan

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Highland Council has declared a 'Housing Challenge' as it aims to build 24,000 homes in a decade.
Highland Council has declared a 'Housing Challenge' as it aims to build 24,000 homes in a decade.

Highland Council has declared a “housing challenge” as it projects it will need more than 24,000 homes costing between £2.8 billion over the next decade or £1.7 billion over the next 14 years so that demand meets supply.

The main factors behind the move are the inauguration of the Highland Green Freeport which is expected to attract around 8400 direct jobs and there are 8600 households on the Highland Housing Register.

So the council now says it has revised its housing supply targets and they now stand at 24,235 over the next 10 years – 7078 of those are affordable homes required while 17,157 are market homes.

The costs are more than can be sustained by the local authority alone as costs have risen 44 per cent since Covid and are now about £227,000 per home and then there is the annual historic debt repayments of £26 million a year.

That too is expected to go up to £35 million and slices an almost 42 per cent chunk out of the council’s housing budget as the total debt is £365.2 million – much of that is historic debt from district councils.

Michael Gove visiting the Green Freeport. Picture: Callum Mackay..
Michael Gove visiting the Green Freeport. Picture: Callum Mackay..

Therefore the council leader Raymond Bremner has written to both Michael Gove, secretary of state for housing and to Angela Raynor, the deputy leader of the Labour Party to ask for a partial write-off of the housing debt to free up funds.

How that is financed is the big question. Currently the opportunities presented by the freeport is one of the main routes as the council will get funds through Non-Domestic Rates.

Labour’s deputy leader Angela Rayner.
Labour’s deputy leader Angela Rayner.

Other options being entertained include other sources of patient capital or private equity to enable housing investment, maximising additional private sector developments and paying for it through the main council fund.

However, a new means is also tabled by getting more cash from renewables developers through a new Social Values Charter from Renewables which is targeting half a billion pounds worth of revenue.

Currently, local communities receive approximately £9.1 million annually in community benefits – it should according to Crown Estate guidance be closer to £13.9 million.

The potential income from the community benefit funding available from operational, planned and repowered onshore wind farm sites could be £17.5m per year in 2030 (total of £158.9 million) or £20.7 million a year by 2050 (£549.4 million)

Another way to close the gap is templating the work the council is doing with SSEN Transmission on various “legacy projects” with other developers which would see former worker accommodation redeveloped as housing.

Empty Homes would be offered as long term leases creating extra capacity in council “empty homes” initiatives and making use of disused properties by upgrading near SSEN sites purchased for staff use.

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