The AHSP funds a variety of schemes to help the supply of affordable housing. There is no overall definition of what 'affordable' housing means but, for the purposes of the AHSP, it includes housing for:

• social rent provided by registered social landlords (RSLs) and councils

• mid-market rent (housing with higher rents than social rented housing, but lower than the equivalent market rent)

• affordable home ownership.

The AHSP is composed of a mix of grant and loan funding.

Grant funding: Social landlords and other affordable housing providers use the Scottish Government grant funding, in addition to their own borrowing and any other funding contributions that may be available, to deliver new homes through the AHSP. A later section of the briefing covers the grant subsidy system in more detail.

Financial Transaction (FT) funding: FT funding is allocated to the Scottish Government by the UK Government. The Scottish Government has discretion over how it allocates FT monies to projects. FT funding has mainly been used for some affordable home ownership shared equity schemes, some mid-market rent developments and the Charitable Bond programmes. FT funding is paid back to the Scottish Government and then to HM Treasury.

Table 1 shows the AHSP budget since 2021-22 in cash terms while Table 2 provides this information in real terms.

As part of the response to the housing emergency, in September 2005, the Scottish Government also announced a commitment to invest public sector funding of £4.1 billion over the next four years (including 2026-27) which is estimated to contribute to 36,000 affordable homes being delivered.²Scottish Government . (2025, September 2). Tackling Scotland's Housing Emergency. Retrieved from https://www.gov.scot/publications/tackling-scotlands-housing-emergency/ [accessed 10 August 2026] Details of the funding for each year will be announced as part of the normal annual budget process.

Table 3 shows expenditure on the AHSP compared to the budget. The latest expenditure data available is for 2022-23.

The underspends in the budgets for 2021-22 and 2022-23 are related to the issues discussed in the ‘Challenges of delivering new affordable homes’ section.

The AHSP is managed by the Scottish Government through a network of area teams supported by central investment co-ordination and policy teams.

Under the Transfer of the Management of Development Funding (TMDF) arrangements, Glasgow City Council and the City of Edinburgh Council manage the development programme in their areas on behalf of the Scottish Government.

Most of the AHSP is comprised of grant funding which is delivered through local programmes planned by local authorities.

Local authorities have strategic responsibility for housing in their areas. They are required by law to prepare a local housing strategy for their area supported by housing need and demand assessments (HNDAs).ⁱSection 89 of the Housing (Scotland) Act 2001

Given their strategic housing role, local authorities are responsible, in collaboration with local housing delivery partners, for preparing Strategic Housing Investment Plans (SHIPs) for their areas. A SHIP is the key document for identifying priority affordable housing and Gypsy/Traveller accommodation proposals.

Scottish Government guidance states that the SHIP is an operational rather than policy document and:

• "reflects and aligns with the housing policies and outcomes set out in each local authority’s Local Housing Strategy (LHS) and LHS Outcome Action Plan

• reinforces the role of the local authority as the strategic housing authority

• informs Scottish Government investment decisions

• informs the preparation of a Strategic Local Programme Agreement that sets out the planned programme across the local authority and, where required, informs the preparation of Programme Agreements to individual providers setting out their planned programme."¹Scottish Government. (2026). Strategic Housing Investment Plan (SHIP) guidance note MHDGN 2026/01. Retrieved from https://www.gov.scot/publications/strategic-housing-investment-plan-ship-guidance-note-mhdgn-2026-01/ [accessed 27 July 2026]

SHIPs are submitted to the Scottish Government on an annual basis. The Scottish Government then conducts a review of each SHIP to satisfy itself that the proposals reflect national and local priorities; are deliverable; and have been informed by appropriate engagement and consultation. It is expected that councils formally approve and publish their SHIP.

A resource planning approach has been agreed with the Convention of Scottish Local Authorities (COSLA). The Scottish Government provides each local authority with a Resource Planning Assumption (RPA), which is a funding assumption. This enables each local authority to set out local priorities for affordable housing developments in their Strategic Housing Investment Plans, informed by the strategic priorities in their LHS.

A Strategic Housing Investment Framework was agreed with COSLA to determine the allocation of funding to 30 of the 32 local authority areas (funding for Glasgow City Council and the City of Edinburgh Council is agreed separately and includes funding from the Local Government Settlement). The Strategic Housing Investment Framework formula takes into account four indicators: affordability, deprivation, rurality and homelessness.

A Scottish Government FOI response also sets out more detail of the framework that is used.¹Scottish Government. (2026). Resource Planning Assumptions and funding for Affordable Housing Supply Programme: FOI release. Retrieved from https://www.gov.scot/publications/foi-202600514819/ [accessed 8 July 2026]

Each local authority has flexibility to apply the available Scottish Government funding to strategic priorities it identifies within its geographic area. If any funding is not spent within the financial year it has been allocated, those funds may be reallocated to other local authority areas across Scotland. Where monies are reallocated, the Scottish Government cannot guarantee that local authority allocations will be readjusted in future years to compensate for any previous reallocations.

Details of the RPAs for 2026-2027 to 2029-2030 are available on the Scottish Government website.

The Scottish Government provides grants to social landlords to help deliver new homes, with social landlords funding the remainder of the costs. While the majority of the extra cost is funded through borrowing, for example prudential borrowing by local authorities or private finance raised by RSLs, any other funding contributions that may be available are also taken into account.

Other sources of funding include:

• money raised by councils from charging additional council tax on second homes

• developer contributions from affordable housing planning policies

• charitable bond funding instead of AHSP resources

• contributions from local authority housing revenue accounts

• any other public sector contributions

• sales income.

When applying for grant assistance at tender stage to deliver homes for social rent and mid-market rent, local authorities and RSLs are required to self-certify that the amount of funding that they are requesting is the minimum required for a project to be financially viable for their organisation whilst ensuring rent affordability.

For new build, refurbishment and conversion projects, the amount of grant requested is then compared with the applicable affordable housing investment benchmark to determine how the funding application will be assessed.

Projects that can be delivered with grant funding at or below the relevant benchmark follow a streamlined assessment process, with projects which are seeking grant funding above the relevant benchmark following a more detailed value for money assessment. The benchmark system is therefore a flexible administrative tool which is used for grant assessment purposes only – rather than being a grant rate or grant ceiling.

A review of affordable housing investment benchmarks was undertaken between March and June 2021. One of the outcomes of that review was a commitment to adjust the benchmarks on an annual basis. Table 4 outlines the current set of affordable housing investment benchmarks, which came into effect in March 2026.

Higher baseline benchmarks are available for social rented projects and mid-market rented projects in (a) West Highland, Island authorities and remote/ rural Argyll and (b) other rural areas.

Additional benchmarks are available for certain quality features such as the provision of balconies in flatted developments, homes delivered to Section 7, Silver Level, of the 2019 Building Regulations in respect of energy for space heating, and the installation of zero direct emissions heating systems (see Table 5).

The average cost to deliver an affordable home and the proportion funded by Scottish Government grant has increased over the years. In 2019-20, the average cost of an RSL social rented home (at tender approval stage) funded through the AHSP was £158,000, with Scottish Government grant funding 56% of costs. In 2023-24, the same cost was £198,000 with a Scottish Government grant funding rate of 62%.³Scottish Government. (2025, December 16). Affordable Housing Supply Programme: out-turn report - 2023 to 2024. Retrieved from https://www.gov.scot/publications/affordable-housing-supply-programme-out-turn-report/documents/ [accessed 21 July 2026]

The majority of homes developed under the AHSP are new build homes.

The AHSP also supports councils and RSLs to buy existing homes to meet housing need in their areas and many social landlords have well-established acquisition policies.

Some councils operate schemes under which they acquire properties in particular areas or specific house types (such as larger properties) that are in higher demand. Falkirk Council, for example, has, since 2013, focussed on buying back ex Right to Buy Council properties. The City of Edinburgh Council has, over a number of years, undertaken an open market purchase programme, primarily to increase affordable supply in the city but also allowing for homes in mixed tenure blocks to be acquired in order to consolidate ownership.

In light of the housing emergency and high numbers of homeless people living in temporary accommodation, the Scottish Government has targeted further resources specifically for acquisitions and voids. It has also allowed social landlords to purchase properties from private landlords who wish to sell with the tenant in situ where this meets a strategic need and where the tenant is at risk of homelessness.

Rural Key Workers Housing Fund

The Scottish Government has also established a demand-led Rural Affordable Homes for Key Workers fund worth up to £25 million over a five year period (2023-24 to 2027-28). It is available to local authorities and RSLs to purchase existing suitable properties in rural and island areas to provide affordable homes for key workers where there is identified need. Local authorities are expected to engage with a range of organisations and business in their area to develop proposals for use.¹Scottish Government. (2023, April 23). Affordable housing initiative for key workers. Retrieved from https://www.gov.scot/news/affordable-housing-initiative-for-key-workers/ [accessed 6 February 2025]

As of the end of August 2025, 29 homes had been approved through the scheme. In addition, Scottish Government officials are actively engaging with local authority partners on potential projects totalling more than 40 homes. ²Scottish Government . (2026, January 6). Retrieved from Details of the Rural Affordable Homes for Key Workers Fund: FOI release [accessed 27 July 2026] As of 7 April 2026, £18.911 million of the £25 million Rural Affordable Homes for Key Workers Fund remains available to be allocated.³Scottish Government. (2026, July 29). Rural housing funds remaining available for allocation: FOI release. Retrieved from https://www.gov.scot/publications/foi-202600513796/ [accessed 3 August 2026]

The Scottish Government also manages a number of national programmes through the Affordable Housing Supply Programme.

The national programmes include:

• Open Market Shared Equity Scheme: this supports first-time buyers and those on low to medium incomes to purchase a home on the open market with the Government taking an equity stake in the home. Priority access is given to applicants who live in social rented housing, disabled people, members of the armed forces and veterans. This is a demand-led scheme.

• Rural and Islands Housing Fund: The fund is open to a range of applicants including:

  • community organisations

  • development trusts

  • private landowners

  • private developers

  • traditional housing providers.

The Rural and Islands Housing Fund has a budget of up to £37 million between April 2021 and March 2028. Examples of projects approved can be found on the Scottish Government website.

• Charitable Bonds: the programme provides RSLs with unsecured loans for up to 15 years. Interest on the loans generates a charitable donation which the Scottish Government directs to support further social rented homes.

In February 2026, the Scottish Government announced its intention to develop a Rural and Island Housing Grant Scheme. In response to a parliamentary question in June 2026, the Cabinet Secretary for Social Justice and Housing, Shirley-Anne Somerville MSP, indicated that "It is expected it will provide support to first time buyers, families, rural returners and others to help them access affordable owner occupation in the rural and island communities of their choice" and that "Our intention is that the fund will be operational in 2026-2027 but will want to take time to develop the finer details in collaboration with rural and island housing partners to ensure that this scheme meets the needs of rural and island communities." ¹Scottish Government . (2026, June 8). Scottish Parliament Written Question S7W-00186. Retrieved from https://www.parliament.scot/chamber-and-committees/questions-and-answers/question?ref=S7W-00186 [accessed 3 August 2026]

In June 2026, the Scottish Government opened the First Homes Fund, a shared-equity scheme that gives first-time buyers up to a £10,000 contribution towards a deposit for a home valued at up to £300,000. The Scottish Government expects that a proportion of the homes purchased through the fund will count towards the AHSP target within the category of low-cost homeownership.ⁱCorrespondence with Scottish Government officials August 2026

Data on completions under the AHSP are regularly updated on a quarterly basis in the Scottish Government's Affordable Housing Supply Programme Summary Tables available on the Scottish Government website.

Further detail on the completions and spend under the AHSP are available in the Scottish Government outturn reports. These reports can be accessed on the Scottish Government website are normally published in January/February each year, around 10 months after the financial year end.

Quarterly data on social and affordable housing approvals, site starts and completions by local authority and financial year is also published on the Scottish Government website.

Figure 1 shows the number of completions by tenure between 2016-17 to 2025-26.

Source:Scottish Government. (2026, August). Affordable Housing Supply Programme Tables . Retrieved from https://www.gov.scot/binaries/content/documents/govscot/publications/statistics/2019/06/housing-statistics-for-scotland-new-house-building/documents/affordable-housing-supply-programme-summary-tables---new-style/affordable-housing-supply-programme-summary-tables---new-style/govscot%3Adocument/June%252B2026%252B-%252BAffordable%252BHousing%252BSupply%252BSummary%252BTables%252B%252B-%252BWeb%252BTable.xlsx [accessed 7 August 2026]

The Scottish Government started delivering towards the target from 23 March 2022, as this was when the previous 50,000 affordable homes target was completed. From this date to end of March 2026, 35,368 affordable homes have been completed, representing around 32% of the target.

The Scottish Government's affordable homes target includes a commitment to deliver 10% of the target in rural and island communities. Progress towards the rural element of the target is not regularly reported in the quarterly statistics.

Various reports have highlighted some of the challenges to delivering new homes. The Session 6 Local Government, Housing and Planning Committee also considered some of these issues as part of its Housing Inquiry.¹Local Government, Housing and Planning Committee. (2026, May 15). Housing Inquiry . Retrieved from https://www.parliament.scot/chamber-and-committees/committees/committee-reports/lghp/2025/5/15/lghps062025r10#dp53624 [accessed 10 August 2026]

In May 2025, the Scottish Government published a review of the deliverability of the target. It noted:

"Since the affordable homes target was set, the delivery landscape has been subject to significant disruptive socio-economic uncertainty and macro-economic shocks."

Source: Scottish Government . (2026, May 22). Affordable Housing Supply Programme (AHSP) - Deliverability Review. Retrieved from https://www.gov.scot/publications/affordable-housing-supply-programme-ahsp-deliverability-review/pages/11/ [accessed 10 August 2026]

The review highlighted several significant barriers which in some cases have been exacerbated by Brexit, the COVID-19 pandemic and the war in Ukraine:

• construction cost inflation has substantially increased the cost of delivering new affordable homes

• labour shortages and supply-chain pressures continue to affect development timelines

• higher borrowing costs have weakened the financial position of housing associations and local authorities

• capital budget reductions, including the 2024-25 reduction in AHSP funding, have constrained future delivery pipelines.

The Scottish Housing Regulator (SHR) has also consistently highlighted that RSLs face a combination of financial, economic and operational pressures that are making it increasingly difficult to deliver new affordable homes. It has highlighted the persistent cost of living challenges for RSL tenants, especially in food and drink prices and energy costs. This increases pressure on landlords to ensure affordability whilst balancing spending commitments, including future net zero commitments.³The Scottish Housing Regulator. (2024, November). The risks we will focus on - November 2024. Retrieved from https://www.housingregulator.gov.scot/landlord-performance/the-risks-we-will-focus-on/the-risks-we-will-focus-on-november-2024/#section-4 [accessed 6 February 2025]

In April 2024, the Scottish Government created a Housing Investment Taskforce, to identify actions to unlock existing and new commitments to investment in housing. The Taskforce's final report highlighted the importance of predictable Government investment in affordable housing to provide certainty for developers, housing associations and investors. It also argued that public subsidy alone will not meet housing demand, recommended attracting institutional investors into affordable housing delivery and suggested new public-private partnership models.⁴Housing Investment Taskforce . (2025, March). https://www.gov.scot/binaries/content/documents/govscot/publications/independent-report/2025/06/housing-investment-taskforce-report/documents/housing-investment-taskforce-report/housing-investment-taskforce-report/govscot%3Adocument/housing-investment-taskforce-report.pdf. Retrieved from Housing Investment Taskforce Report March 2025 [accessed 10 August 2026]

A report by the University of Glasgow/UK Collaborative Centre for Housing Evidence and Newhaven Research published in 2024 argued that the AHSP requires a "reboot" and called for⁵Gibb, K., Young, G., & Earley, A. (2024). Sustainable Housing Policy in Scotland: Re-Booting the Affordable Housing Supply Programme. Retrieved from https://housingevidence.ac.uk/wp-content/uploads/2024/10/031024-JRF-AHSP-Scotland-v3.pdf [accessed 6 February 2025]:

• clearer strategic direction from government

• greater prioritisation of social rented housing

• increased grant rates to reflect real development costs

• longer-term funding certainty for providers.

The challenging operating environment for social landlords and high levels of homeless households in temporary accommodation, amongst other factors, has led 14 local authorities to declare local housing emergencies in their areas.On 15 May 2024, the Scottish Parliament also agreed a motion declaring a nationwide “housing emergency.”

The Scottish Government's initial response included the increase in the AHSP budget for 2025-26 and targeting additional resources at local authorities that face the most sustained homelessness pressures. Later, in September 2025, it published a national Housing Emergency Action Plan . It focuses on three strategic goals:

• ending the use of unsuitable accommodation for children⁶Scottish Government . (2025, September 2). Tackling Scotland's Housing Emergency. Retrieved from https://www.gov.scot/publications/tackling-scotlands-housing-emergency/ [accessed 10 August 2026]

• supporting vulnerable communities’ housing needs

• maximising investment to address Scotland’s housing emergency.

Short‑term measures to address the situation included extra funding for social landlords to buy homes. Longer term measures include the increase in the AHSP budget, the four-year funding commitment and a new cross-tenure housing delivery ambition.

The previous Cabinet Secretary for Housing, Mairi McAllan MSP, reaffirmed the Government’s commitment to the target whilst acknowledged the challenges to delivery:

Achieving that involves everything that I have mentioned: increasing the affordable supply programme; giving four years of funding certainty, to allow RSLs, councils and others to plan; setting the all-tenure target; and making sure that planning is a facilitator, not an inhibitor. It is all those things, as well are trying to build up the capacity to where we need it to be, because the curve is steep.

Source:Scottish Parliament. (2025, October). Scottish Parliament, Local Government, Housing and Planning Committee meeting 7 October 2025. Retrieved from https://www.parliament.scot/api/sitecore/CustomMedia/OfficialReport?meetingId=16628 [accessed 7 August 2026]

In January 2026, the Scottish Government announced the establishment of More Homes Scotland, a national housing agency intended to streamline and accelerate housing delivery. The plan is for the agency to become fully operational in 2028–29. The Scottish Government plans that More Homes Scotland will:

• make greater use of land assembly and preparation powers to support viability and help accelerate pace of delivery

• provide enhanced support for housing planning and development delivery

• introduce greater opportunities for standardisation and adopt simplified commissioning options

• promote flexible funding approaches to drive economic growth opportunities, including through joint working with Scottish National Investment Bank.

Source:Scottish Government . (2026, March 25). Letter to the Convener of the Local Government, Housing and Planning Committee from the Cabinet Secretary for Housing regarding More Homes Scotland, 25 March 2026. Retrieved from https://www.parliament.scot/-/media/files/committees/local-gov/correspondence/2026/more-homes-scotland-update_cab-sec-housing-to-lghp_25-march-2026.pdf [accessed 22 July 2026]

The design, functions and operating model of the new agency will be led by the Scottish Government in conjunction with local authorities and the Scottish National Investment Bank. ⁵Gibb, K., Young, G., & Earley, A. (2024). Sustainable Housing Policy in Scotland: Re-Booting the Affordable Housing Supply Programme. Retrieved from https://housingevidence.ac.uk/wp-content/uploads/2024/10/031024-JRF-AHSP-Scotland-v3.pdf [accessed 6 February 2025]

The number of affordable homes completed in the coming years will depend on the number of approved homes and the number currently under construction. Over the last three financial years, the number of approvals has averaged around 7,000 per year, while site starts have averaged around 7,300 per year.

With just over five years of the target period remaining around 77,500 completions are required to meet the 110,000 target, an average of more than 15,000 per year. Although there can be ‘peaks and troughs’ in the funding and delivery of new homes over a long-term programme, at current levels of approvals and site starts the target looks challenging to meet without a significant scaling-up of delivery.

A recent report by the Fraser of Allander Institute at the University of Strathclyde, commissioned by the Scottish Federation of Housing Associations (SFHA) and the Association of Local Authority Chief Housing Officers (ALACHO), concluded that under several different scenarios the Scottish Government is unlikely to meet either of its affordable housing commitments within the stated timescales:

There is no doubt that the Scottish Government’s targets reflect the scale of need and the ambition to tackle it. However, these targets are set at a time when it has become significantly harder to build new homes. Rising construction costs, supply chain pressures and wider economic uncertainty are all affecting what can realistically be delivered. Setting multiple, ambitious targets within the same parliamentary term also creates difficult trade-offs, increasing the risk that expectations run ahead of what the system can deliver.

Our analysis suggests that the headline targets - 110,000 homes by 2032 and 36,000 homes by 2029/30 - are unlikely to be met in full. This is not simply a result of policy choices, but of external factors that are largely outside government control, particularly in the construction sector. At the same time, the funding available to support new developments is struggling to keep pace with rising costs, making it harder for councils and housing associations to bring projects forward.

The key message is that ambition alone will not deliver more affordable homes. To turn targets into reality, the system needs to better reflect current economic conditions. This could mean being clearer about priorities, ensuring funding is more responsive to cost pressures, and taking a more flexible approach to targets as circumstances change. Without this, there is a risk that well-intentioned policy goals continue to outpace delivery, slowing progress at a time when the need for affordable housing remains high.

Source:Fraser of Allander Institute. (2026, August). An overview of the provision of affordable housing in Scotland. Retrieved from https://www.sfha.co.uk/sites/default/files/2026-08/sfha-spending-commitment-analysis_0.pdf [accessed 18 August 2026]

It remains to be seen what impact the recent budget increase and other measures to address some of the challenges to delivering affordable homes will have over the next few years.

Beyond the focus on housing numbers, the Scottish Government and other organisations have highlighted the wider benefits of investing in affordable housing. These include supporting the Scottish Government's commitment to eradicate child poverty and creating economic benefits through investment in the building and construction sector.

The review of the deliverability of the target also found that some stakeholders felt the focus should be on the impact of affordable housing, rather than simply the number of homes built. For example, even a small number of new homes in rural and island communities can make a major difference to the long-term future and sustainability of those communities. However, these homes make only a small contribution to the overall affordable housing target.