Development & Housing

We are attracting investment into Scotland’s towns, cities and communities to deliver housing, improve public service delivery, secure economic benefits, and contribute to Scotland’s net zero carbon target.

Mid-Market Rent

The mid-market rent (MMR) sector is well-established in Scotland (including Scottish Future Trust’s National Housing Trust programme) and continues to grow. It is seen as a strong and desirable affordable housing offering, with safe, comfortable, and quality homes that people choose to live in.  

SFT has been at the forefront of the MMR sector for over a decade, working with partners to support the delivery of homes through initiatives including the National Housing Trust and Housing Delivery Partnerships.


National Housing Trust 


To achieve a sustained increase in the number of homes being built in Scotland, collaboration between the public and private sectors is a fundamental requirement.  Our National Housing Trust (NHT) is such a collaborative initiative that has increased the number of affordable-rent homes across Scotland.

Under NHT, developers were appointed to build a specified number of affordable homes on land they already own. Most of these new homes have been built and represent nearly £400m of additional investment in the affordable housing sector.  Once built, a local partnership company made up of the developer, the participating local authority and us, buy the homes and lets them to tenants at affordable, mid-market rent for a guaranteed minimum period of 5 years.

Across all phases of NHT, we have signed contracts to build over 1,700 energy-efficient, quality, affordable-rent homes on 30 sites in numerous locations across Scotland; homes that would not have been built without SFT’s involvement.

The vast majority of these homes have been built and are occupied, providing tenants with quality, energy-efficient homes in areas where they want to live which are close to friends and family. 

The focus of our work on NHT now is working together with partners to secure homes for long term affordable rent beyond the initial 5-year guaranteed period, whenever possible. So far, over 250 former NHT homes have been sold to affordable housing providers, securing their availability for long term affordable rent. 


Housing Delivery Partnerships 

The Housing Delivery Partnership model (HDP) developed by Scottish Futures Trust promotes the provision of Mid-Market Rent homes on a self-sufficient and self-sustainable basis.  It allows for the use of the Scottish Private Residential Tenancy, providing strong tenant protection while giving the HDP the ability to operate on a more ‘commercial’ basis. 

The HDP – taking the legal form of a Limited Liability Partnership – is financed through funds borrowed by the Local Authority from the Public Works Loan Board, which are then ‘on-lent’ to the HDP. This low-cost finance is directly channelled to the LLP as MMR meets the definition of affordable housing, a Service of General Economic Interest under state aid legislation. This reduces the reliance on grant funding to build or acquire the homes.

Rents are set at MMR levels such that the HDP is financially self-sufficient – that is, the rental income covers the interest, insurance and management and maintenance costs. The homes are maintained and managed on a commercial basis, to reflect and improve upon the service to tenants provided on the private rental market.

Homes can be delivered as part of the Local Authority’s own housebuilding programme or through procurement from developers. Similarly, the management and maintenance service can be provided by the Local Authority’s own housing services or by a procured service provider.

Case Study – Edinburgh Living

Edinburgh Living MMR LLP is a limited liability partnership (LLP) between SFT and the City of Edinburgh Council. The publicly owned LLP acquires new homes for mid-market rent, funded primarily through the on-lending of PWLB monies by the City of Edinburgh Council, with £22k per unit of grant support provided by the Scottish Government to establish the model and de-risk an ambitious pipeline spread over a number of years. Edinburgh Living MMR LLP acquired its first homes in January 2019 and since then has built up a portfolio of 150 homes with plans to acquire at least 600 more over the next 3 years. The MMR LLP has a sister company, ‘Edinburgh Living MR LLP’, which takes a similar approach to the acquisition of market rent homes (with starting rents higher than LHA and delivered on a commercial basis with no SG monetary support).


Lease-based Approach

SFT is in the process of developing a model which harnesses the public sector ethos of Local Authority managed housing alongside private investment in affordable homes.  This model uses a leasing approach and sees Local Authorities lease homes acquired by institutional investors (or other appropriate private sector investment entity) over the long term.

SFT is exploring options to develop this mechanism into a coherent, universal offering which is attractive to institutional investors while achieving public sector priorities in securing good quality homes for tenants, which they can afford to live in and meets their needs. 

Case Study – East Lothian Mid Market Homes

East Lothian Council has piloted the potential for leased MMR housing through their new vehicle “East Lothian Mid Market Homes”, a limited liability partnership (LLP) between East Lothian Council and SFT. The LLP has acquired 50 homes for MMR in Dunbar, using a model which involved a commitment by institutional investors Co-op Pension Fund (via their fund managers PGIM) and their partners 3H York to set up a Special Purpose Vehicle to acquire homes on practical completion and lease these to the LLP. The rental income generated is used to cover management and maintenance, insurance and, crucially, lease charges to the investing body. On conclusion of the 40-year lease, the Council will acquire the homes for £1. All 50 homes reached practical completion by October 2019.