SNIB may finally be investing in housing - but with a catch

The Scottish Government made a statement yesterday on Tackling Scotland’s Housing Emergency in which they announced a substantial acceleration to housebuilding in Scotland - just under £5 billion over four years to be spent (albeit as a mixture of public and private money) on housebuilding plus pots of money for various initiatives such as additional funding for Housing First (the programme that provides housing for people threatened with or suffering homelessness), funding to help domestic abuse survivors leave their abusers, and new ministerial directions around improving strategies for building on rural and brownfield sites.

One major campaign victory for Common Weal has been the announcement that the Scottish National Investment Bank will be directed to spend more of its time and money on housing projects. Just a couple of weeks ago, we briefed that the SNIB was becoming increasingly vulnerable due to being over-focussed on flashy tech companies and was not doing enough to develop a foundational portfolio based on housing and energy. Just a week after we wrote that briefing, one of SNIB’s keystone flashy tech companies - the first it ever invested in - went bust, jeopardising £34 million worth of publicly financed loans.

Under this new Ministerial direction the SNIB will be instructed to invest in land purchases in rural areas to allow housebuilding to take place. With lack of access to land being a major bottleneck to such building in rural Scotland, this could well be a major breakthrough.

There is a catch though.

Under our plan for SNIB, the bank would be investing in social housing. This would create a long term, patient, and stable return on investments that would allow the rents from the homes to effectively underpin the bank’s operations in higher risk and higher reward sectors like Scottish lasers.

The Bank isn’t going to be doing this. Instead it will “explore new ways to blend commercial capital and public subsidy to unlock more urban and rural homes across tenures.” and “unlock land, build delivery capacity and develop a pipeline of investment opportunities”.

There is a major risk here. Volume build housing developers are the very opposite of a patient investor. Their job is to get in, build quick (and cheap) and get out with the money. They’re less interested in a “pipeline of investment” as they are in a firehose of quick cash.

And while we’ve advocated for SNIB to be involved in accessing land for housing, it has to be done in the right way too. In a poorly designed system it would be easy to imagine private developers using cheap SNIB loans instead of their own capital to bid up the price of land - locking even more people out of their own purchases. Or there could be a scenario where SNIB offers loans to community developers to buy land but - again, because of the speculative uplifts in price - what this effectively does is put communities into long term debt while the already wealthy owner of the land gets millions of pounds of public money.

This plan cannot happen in the absence of land reform. We need a land tax to suppress the speculative increase in land, we need Councils to be better enabled to purchase land at “existing use value” so that owners can’t use planning permissions to speculate up the price of land and we need better regulation of the whole system to avoid situations where public money ends up leaking into the hands of Lairds, corporations and companies based in tax-havens.

That the Scottish Government has apparently started listening to our plans for housing and for SNIB is a major success for Common Weal, but a partial solution may bring with it problems almost as bad as the ones we have in housing at the moment. The Government needs to take the opportunity it has created for itself to be bolder and to ensure that housing is a policy that works for people first, not just companies who build houses.