SNIB is investing in everything except people
The Herald reports today that the Scottish National Investment Bank has started investing in housing, but a closer inspection reveals that this investment is the exact opposite of what housing investment should be and will result in private profiteering and a massive bung to landlords instead of helping people live in secure and affordable homes.
The £50 million investment in the Build To Rent Fund managed by London-based financial firm L&G is said to “support the delivery of high-quality, purpose-built homes for private rent”. It does so in a way that will create houses that were explicitly exempted from the Scottish Government’s rent control regulations passed last year, meaning that tenants will almost certainly see their rents increase even faster than the already above-inflation increases that tenants in controlled rental houses see.
Common Weal has argued since we originally designed the SNIB that it should be investing in housing, but we specifically argued that those investments should not be used to prop up the already inflated and exploitative private rental sector. Instead, the SNIB should be actively disrupting that sector by investing in ultra-high-quality homes for social rent. No one should have to rent privately if they can rent a better house, for less money, from their local authority. This kind of disruption would force landlords to drop prices and increase the quality of their homes, meaning that those who still choose to privately rent would benefit too.
Instead, this investment will push rents up for tenants and continue the trend of landlords and housing developers profiting from essential homes.
There should be massive questions and scrutiny about this kind of investment. Not only does it directly contravene the SNIB’s “Place” mission to “transform communities, making them places where everyone thrives”, it also contradicts their mission to promote innovation, given that the £50 million investment is a negligible amount to give to a company the size of L&G at only about 1% of their current property portfolio. Given that the press release also does not mention as a selling point that the houses will meet the highest levels of energy efficiency demanded by the promised PassivHaus Bill, the investment may breach SNIB’s “Net Zero” mission, too.
There should be questions about the suitability of the homes on offer here too. The company claims to have delivered 10,000 houses at a cost of £4 billion. This implies a unit cost of at least £400,000 per house. These are not “affordable homes”. According to the Scottish Government’s own data, £400,000 marks the top 10% of house prices in Scotland. Given that very few people who can afford to live in a top 10% house are private renters due to the housing emergency, it begs the question of who the target audience is for tenants of these homes. It may well be that the homes are not designed for tenants at all, but that this entire plan is designed around inflating the capital price of housing portfolios in exactly the kind of elaborate pump-and-dump scheme that is the prime cause of the housing emergency. Public money should never be used to encourage this kind of behaviour.
In our original vision for SNIB, its own portfolio would be founded on social housing and then on publicly owned energy schemes before promoting innovation by making riskier investments in promising but underfunded Scottish companies. This investment does none of these things.
An early priority for the Scottish Government must be to review the SNIB’s missions (which are set by Scottish Ministers) to ensure that they properly align with Scotland’s needs and put people first, rather than putting us last behind the profit lines of the already wealthy companies that are exploiting us.