In a letter to the Scottish Parliament’s Local Government, Housing and Planning Committee, McAllan said the agency will be built around an “all‑tenure, whole‑system approach” designed to increase supply at every level of the market and accelerate delivery at scale. She stressed that the model is intended to bring “simplicity, speed and scale” to Scotland’s housing system.

“This new agency must be underpinned by an all‑tenure, whole system approach which increases supply at all levels – driving forward our poverty reduction and growth objectives,” she wrote.

Four core operating principles

MHS will be structured around four key principles intended to remove barriers, reduce duplication and unlock stalled development:

• Greater use of land assembly and preparation powers - MHS will take a more proactive role in assembling land, preparing sites and supporting viability, with the aim of accelerating delivery and unlocking regeneration opportunities.
• Enhanced support for planning and development delivery - The agency will provide additional capacity to local authorities, including planning “surge support”, to speed up strategic applications and reduce bottlenecks in the system.
• Standardisation and simplified commissioning - MHS will introduce more opportunities for standardised design and procurement, drawing on lessons from the Edinburgh Home Demonstrator and regional delivery alliances to reduce costs and improve consistency.
• Flexible funding to drive economic growth - Working closely with the Scottish National Investment Bank, the agency will promote more adaptable funding routes and blended investment models to support cross‑tenure development.

While the agency’s full remit will be finalised after the 2026 Scottish Election, McAllan set out clear priorities for its first phase of operation.

Boosting affordable housing supply remains the top priority, with MHS expected to maximise the impact of the £926 million Affordable Housing Supply Programme budget for 2026–27.

Investment will be targeted towards areas of greatest need, particularly communities experiencing acute housing pressure or marginalisation. Rural and island delivery will be supported, including through scheme aggregation to improve viability for smaller developments and SME builders.

MHS will work alongside SNIB to blend public and commercial capital and accelerate strategic sites. It will also aim to expand modern methods of construction, standardised designs and collaborative procurement to achieve economies of scale, while strengthening planning capacity, including support for stalled sites and further development of the National Planning Hub.

Land assembly powers will also be used more frequently, including testing new approaches to remediation and infrastructure brokerage.

McAllan said the agency is being designed in response to widespread calls from local authorities, developers, investors and housing organisations for a more coordinated national approach.

Stakeholders, she noted, have consistently highlighted the need for system‑wide reform, improved data and insight, stronger regional collaboration and a more strategic pipeline of land.

MHS will now move into a period of testing and refinement ahead of its formal launch in 2027–28 and full operational status in 2028–29.

Responding to the letter, the Scottish Federation of Housing Associations (SFHA) said the new housing agency must be more ambitious to meet housing need.

“The cabinet secretary is right that we need a step change if we’re to tackle the housing emergency and deliver the affordable homes we really need,” said chief executive Richard Meade. “Not least, as she points out, if we’re to tackle child poverty.”

He added: “It is welcome to see more detail on the planned agency, and it has the potential to kick-start development. If we’re ambitious enough with its aims.

“Simply delivering on the existing target of 110,000 affordable homes built by 2032 is just not good enough. We know from independent research that over the course of the next parliament, meeting Scotland’s housing need will require 15,693 social and affordable homes to be built each year. If we don’t have a government who commits to that level of build, any new agency will not be able to end this crisis.”