In November 2020, the Scottish Government announced the extension of the Rural and Islands Housing Fund (RIHF) as part of its Affordable Housing Supply Programme. Established in 2016, the main purpose of the RIHF is to increase the availability of affordable houses throughout rural areas of Scotland. It also aims to address the diverse and specific challenges associated with the delivery of affordable housing in rural communities. The RIHF has a stated investment of up to £30million.

Who can apply?

The RIHF is open for applications from incorporated entities and partnerships only. Applications from individuals will not be accepted. The range of eligible applicants includes housing trusts, development trusts, private landowners, private developers, local authorities, Scottish Charitable Incorporated Organisations, and community organisations. The guidance issued by the Scottish Government does not specifically state whether a private landowning trust may apply but does refer to "private landowning bodies" being eligible.

Where a local authority has already provided funding to an organisation for their project through the Affordable Housing Supply Programme, the organisation will not be eligible to apply to the RIHF for further financial support.

Which projects are eligible?

There are several criteria which projects must meet in order to be eligible to receive a grant or loan under the RIHF. They must:

  • fulfil the key aim of the RIHF, to increase the long-term availability of affordable residential housing throughout rural Scotland;
  • be residential projects, with the housing becoming a main residence. Projects can be to build new houses, refurbish or renovate empty homes or to convert non-domestic / commercial property into residential accommodation. The RIHF cannot be accessed to fund construction of, or renovation into, holiday accommodation;
  • be for new projects. Applications will not be accepted where construction or refurbishment work has already commenced;
  • be in an eligible rural area – i.e within areas which are classified as levels 4 (remote small towns), 5 (accessible rural) and / or 6 (remote rural) in the Scottish Government six-fold urban/rural classification. Applications to the Islands Housing part of the RIHF must be for projects located on a Scottish Island;
  • engage the local community in developing the proposal;
  • be supported by the local authority; and
  • be provided as affordable housing (defined in the relevant Scottish Government guidance) after completion.

What funding is available?

There are two components to the RIHF – the Main Fund and the Feasibility Fund. The Main Fund consists of grant and loan funding (with interest being payable on any loan element). The funding is for capital costs including the cost of acquiring land or property, construction costs, fees and non-recoverable VAT. The feasibility fund is a smaller component which provides support to early-stage proposals, to enable a development project to apply to the Main Fund.

Before any payment of a grant or loan is made a standard security over the land / properties must be granted to the Scottish Ministers.

What happens after completion of a project?

The property must be made available for sale or rent as affordable housing for those who find it difficult to access housing which meets their needs due to either lower than average income or higher than average house prices or rents in the area. Rented properties in the private sector should be let on private residential tenancies.

Please get in touch with your usual Brodies contact if you would like further information or discuss this matter further.


Clare Dunlop

Senior Associate

Iona Clark

Trainee Solicitor