Scheme launched to guarantee rental income for build-to-rent market

THE Scottish Government has launched a scheme to guarantee rental income to boost the build-to-rent housing market.

The Rental Income Guarantee Scheme (Rigs) cuts risk for investors in these developments and could potentially support the creation of 2,500 private rented homes and attract £500 million in investment.

Rigs is the first project of its kind in the UK and involves the Scottish Government underwriting 50% of any gap between 75% and 95% of agreed rental income, within a defined band, to give investors and landlords greater certainty of rental income to investors.

Launching the initiative, Housing Minister Kevin 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.”

Scottish Futures Trust will manage the scheme on behalf of the Scottish Government.

Nicola Barclay, chief executive of Homes for Scotland said the Rigs initiative would “provide investors with greater confidence during the early stages of development” and help boost “choice, flexibility and affordability for tenants”.