A new survey by CIH Scotland has found that while last year's grant rates rise has enhanced development capacity within the Scottish housing sector, many providers are still struggling to make new build stack up.

Senior staff, including council and housing association staff, were questioned on a number of issues and while a third of respondents admitted that the Scottish Government's summer 2013 grant rates rise had significantly enhanced their ability to develop, half said they still needed a higher level of grant for some or all potential developments.

David Bookbinder, Head of Policy and Public Affairs, said: "The difference the grant rates increase made was obvious, with a number of providers commenting that it had particularly strengthened their ability to build a majority of social housing within their overall development programme. In conjunction with key stakeholders, the Scottish Government acted quickly and decisively last year and we should recognise that.

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"But the survey shows that difficulties still exist in both the council and housing association sectors. There are particular worries about providing non-flatted developments and rural housing, and housing in expensive, hotspot areas.

"We know that there is additional grant for some categories of housing, including rural developments, and also that the Scottish Government has signalled a more general willingness to be flexible where a case can be made for higher grant. What we don't yet know is how many applications have so far been made for higher grant and how they have been received."

Mr Bookbinder continued: "It was noticeable how many respondents were looking at development capacity in the context of other pressures, including investment in existing stock. And risk issues came to the fore for many providers.

"One, for example, noted that a greater aversion to risk meant that projects running at a deficit in the early years might not be approved, even though they delivered good value over 30 years.

"Ongoing monitoring of the sector's development capacity will be crucial, as it seeks to maximise output in the current spending round and thereafter."

(JP)