The complex issues underpinning Uist’s affordable housing shortfall

The Comhairle is debating how to maximise the value of £16m of as yet unspent Scottish Government affordable housing funds.
The Government’s allocation for the Western Isles for the five-year period up until 2026/27 is £42m, allocated at around £8.5m per year. The Comhairle’s current housing programme plans for a further 100 new houses up to 2026/27, accounting for £26m of that £42m fund, and leaving a balance of around £16m not yet allocated.
Current commitments require the Comhairle to site 55% of all new builds outside of Stornoway to support population growth and retention in the most fragile rural communities, but increased building costs in rural areas has meant that this commitment is now in question.
At a meeting of the Sustainable Development Committee in June, elected members were asked to consider whether to step back from the 55% commitment to ensure the remaining £16m can be fully utilised. The decision was put on hold pending further discussion at an Affordable Homes Seminar for elected members, due to be held this month.
The Government funding is tied into a set of benchmark unit costs, which for Island areas, is currently set at £95k per unit, well below average unit build costs in the Western Isles.
Neither the Comhairle or Hebridean Housing Partnership (HHP) were able to confirm current average unit costs, but both agreed that the Uist figure is well above the Government’s agreed £95k budget.
HHP states that additional freight costs mean island prices have historically been 20-25% higher than on the mainland, and this increases the further you travel from Stornoway. This geographical disadvantage is exacerbated by significant inflation over the last few years, which has led to price increases of around 50% over the last 10 years.
The situation is sorely felt by local contractors. Iain MacInnes, Project Manager at MacInnes Bros Ltd, explains: “The cost increases start before a brick is even laid. Virgin sites just need more preparatory work – access roads, peat clearance, land drainage, independent sewer networks – theses are all costs you wouldn’t need to consider in an urban construction project. Then there is the logistics of managing freight through a sometimes unreliable ferry service. The cost of fuel is an issue – our lorries carrying full load manage about seven miles to the gallon – that’s a lot of fuel to get the materials we need on site. The UK Government changed the rules on the use of red diesel within construction in April of this year, and we are no longer able to use the cheaper fuel alternatives for our work. That decision has cost MIB an additional £20k per month to operate essential construction plant at just our Lochmaddy development site alone. There are additional costs, and additional risks and the contractor is often the one who carries that. It can end up with some projects not being commercially viable.”
Iain is clear that the burden should not hold back development: “Building in rural settings is more difficult and more costly, there’s no denying that, but the value of these projects has to be considered in a wider sense. The cost of a rural build needs to be seen against the wider value it adds to the community and smaller settlements across Uist: the jobs it helps retain, the population it helps to stabilise, the school rolls it helps maintain.”
Rural developments also face additional hurdles in finding suitable land, it can take up to two years and cost as much as £5,000 to free up croft land for development.
MSP Rhoda Grant told Am Paipear: “While it’s their responsibility to ensure adequate good quality housing, the Council and HHP are being placed in a really difficult position. The requirements for Government funding mean that they already exceed their per unit house budget within Stornoway, and by the time they look at building in Barra those prices have tripled. It’s a natural deterrent for island authorities to build in more rural areas as they desperately try to maximise the return for the paltry budgets they’ve been allocated.”
MSP Alasdair Allan believes the issue is directly impacting local communities: “The shortage of affordable housing in Uist is having considerable social and economic impacts. A limited or expensive housing market means that it is harder for islanders to access suitable properties on the open market, making it more likely that they live in accommodation which does not match their needs. As a result, younger people and families may be pushed out of island areas like Uist where they are sorely needed.”
Dena Macloed, Chief Executive of HHP has stated that delivering the housing programme within budget is becoming more difficult: “HHP’s vision is to provide good quality and affordable homes: that vision is challenging to deliver at the best of times but our current economic climate is making it much harder. The cost of living increases are impacting on every aspect of our work so we are able to do much less with the money we have available from rental income.”
“Developments of new homes would not be possible without the grant we received through the Scottish Government’s Affordable Housing Programme but even with the grant, the finance we are required to commit to each new development has increased substantially.”
Despite the issues, rural development does go ahead. HHP has recently delivered new housing developments in Garrynamonie, Howmore and Balivanich, and has a further 12 homes planned for this financial year, and a further 16 by 2026.
Matching housing stock to local need requires a flexible approach, says Donna Young, Smart Clachan Development Officer at Rural Housing Scotland in Balivanich: “We believe that affordable homes come in all shapes and sizes. Our Smart Clachan development at Rubha Bhuailt in Lochboisdale incorporates energy efficient homes alongside shared amenities, such as a workspaces and poly crubs. The eight houses in the development will be available to purchase through shared equity, with islanders given priority. The project has only just been submitted for planning permission but we have already had notes of interest from 14 people, some of whom are current HHP residents.”