Designed to help with costs in rural and island communities, the scheme will enable people, including first-time buyers and families, to own affordable homes in the places they want to live.

Announcing the scheme at the National Farmers Union Scotland Conference, the first minister also confirmed a package of agricultural support including £14.25m to deliver a second round of the Future Farm Investment Scheme; tripling capital funding for small producers to £1.5m; and £1m for the Sea Eagle Management Scheme. In total, the draft budget will provide £660m in support – representing the most generous support package in the UK.

First minister John Swinney said: “We want to ensure people can put down roots in rural and island Scotland or move back to the communities where they grew up, so helping them to access a home is crucial.

“We will work with partners to develop the Rural and Island Housing Grant Scheme, with an indicative budget of up to £20m. It will build on our positive track record in affordable housing – with 10% of homes being delivered in rural and island communities – and underpin our work supporting the development of the new housing agency, More Homes Scotland.

“It is also important for the sustainability and growth of our agricultural businesses, and for our rural and island economies. It will complement other measures intended to demonstrate, through the most generous direct investment in the UK, our commitment to working in partnership with Scotland’s farmers, crofters and land managers to deliver the support they need to meet the opportunities and challenges that lie ahead.”

Subject to the outcome of the Scottish Parliament election, the Rural and Island Housing Grant Scheme will have an indicative budget of up to £20m over four years. Development of the Scheme will take place with rural and housing partners.

It will also operate alongside the £37m Rural and Island Housing Fund, which was recently extended to 2028 and is open to organisations to provide low-cost home ownership or homes for social rent.