The Private Rented Sector (PRS) Rental Income Guarantee scheme would see the Scottish Government sharing a proportion of rental income risk associated with large-scale new developments.
The guarantee is intended to compensate owners for a financial shortfall in qualifying projects arising as a result of lower than projected rental income.
Expert panel, the PRS Working Party, estimates the guarantee could directly support construction of 2,000 additional homes in the new build-to-rent sector, and has the potential to deliver thousands more when combined with other measures.
The introduction of a guarantee was one of the key recommendations flowing from the work of the Scottish Government-supported PRS Champion Gerry More, who is advised by the Working Party experts.
Social Justice Secretary Alex Neil said:
“This government is determined to boost the supply of housing across all tenures, helping create vibrant, dynamic neighbourhoods that comprise the quality, warm and sustainable homes our country needs.
“I see the private rented sector playing a major role in the expansion of our housing supply, and we are determined to continue to make Scotland an attractive place for investors to operate in the long term.
“This scheme is designed to give investors greater confidence during the early stages of letting and managing the homes, encouraging early movers in this emerging market to bring developments to fruition at a time when they are needed most.
“We continue to lead the way in the UK in developing innovative financial models, such as this PRS Rental Income guarantee to attract large-scale investment and accelerate the supply of new homes across the country.
“We want to test the rental income guarantee proposal with the market to ensure it is the right tool to deliver on the significant potential for investment that currently exists.”