Housing minister Kevin Stewart has announced the launch of the UK’s first Rental Income Guarantee Scheme (RIGS) to support investment in private rented housing.
Developed in consultation with the sector, the scheme aims to reduce some of the risk that investors see in the emerging Build to Rent market, with potential to attract £0.5 billion of investment and support delivery of around 2,500 new, high quality private rented homes.
RIGS guarantees 50% of any gap between actual and projected rental income of a development which will provide greater certainty of rental income to investors and landlords during the initial years of letting.
Mr Stewart said: “RIGS is a unique scheme, which will boost this emerging sector. As the first of its kind in the UK, the Scottish Government is clearly demonstrating our commitment to the private housing sector.
“This scheme will help deliver new, high quality private rented homes for tenants, which are modern, energy efficient and professionally managed. And it does so in a way that provides assurances for investors, while ensuring good commercial practice and the incentive for investors to let these homes.
“RIGS is just one part of our More Homes approach to increase housing across all tenures. It can deliver potential investment of £0.5 billion, building 2,500 new homes, along with wider economic benefits. And it clearly shows that Scotland is open for business.”
Nicola Barclay, chief executive of Homes for Scotland, which led a Scottish Government commissioned project on how to expand the Build to Rent sector, said: “The announcement of the Rental Income Guarantee Scheme will provide investors with greater confidence during the early stages of development, when letting risk is likely to be highest and is just one of the levers the Scottish Government has put in place to help boost a tenure which has such an important part to play in meeting the diverse housing needs of our growing population.
“As well as the significant investment and development opportunities on offer, expanding build-to-rent will help increase choice, flexibility and affordability for tenants. Most importantly, perhaps, it also has the ability to transform customer experience of the private rented sector through the delivery of new high-quality, purpose-built and professionally-managed accommodation.”
Barry White, chief executive of the Scottish Futures Trust who will manage the scheme, said: “The launch of RIGS has sent out a clear message which demonstrates Scottish Government’s commitment to the Build to Rent sector as an important way to deliver much-needed quality housing.”