A housing association director has called on the Scottish Government to review the way in which it subsidises councils who want to build new homes following reports that one local authority is set to spend £1 million to build just four houses.

Angus Housing Association director, Bruce Forbes, is to request that the housing minister brings subsidies for councils up to the higher level received by housing associations in return for council projects being subject to the same cost scrutiny and approval process.

The call comes after The Courier reported that Angus Council is set to spend £1m to build four homes at Noran Avenue in Arbroath.

As the director of the only housing association based in the region, Mr Forbes said the current system is “clearly failing to maximise the use of scarce resources”.

After reading the details of a debate at the Angus Council communities committee on June 6, he issued the following statement: “As someone who has worked in the housing field for nearly 40 years, it is usually with great pleasure that I read newspaper headlines announcing new homes for rent being built. I know from experience that they are desperately needed.

“When, however, I read that only four new homes would be provided at a cost of £1m, I could not believe that the elected members on Angus Council had agreed to proceed with this project without further scrutiny of the costs. It is completely unsustainable to build new houses at such hugely inflated capital costs and carrying on with projects like this only ultimately means less homes are built for those in need.

“While I know that the houses that Angus Council have built recently are very high quality, these figures do not equate to anything even near the ballpark costs of houses of a similar standard that housing associations like ourselves have been building for the last 20 years. We are about to build 32 new houses in Dundee at an average cost of only £130,000 per unit. Most of these are large three bedroomed homes of which five are special need units including an 8 person wheelchair house similar to the one being built at Noran Avenue.

“At East Muirlands in Arbroath, we are on site building 71 houses at a total cost of £8m. That equates to just over £112,000 per house and includes the cost of buying the land to build on. In the report to the communities committee of Angus Council, the cost of professional fees alone for four houses is reported as £125,000. This is more than it is costing us to build a new house.

“These differences in the cost of building social housing where some houses are costing, on average, double the price must surely need more detailed scrutiny.

“Housing associations do get more subsidy per house than the £50,000 per unit councils receive. This can vary depending on the type and size of house being built. On average, it is around £15,000 more. The differences between housing association and council projects is that our costs are capped, scrutinised and need to be approved by the Scottish Government before we can start building. Our projects also need to raise private finance to fund the balance of the development costs so we have to prove the project is a viable financial proposition before the market will lend us money.

“At the moment, everyone is working hard to deliver the Scottish Government’s 50,000 home target by 2021. If one developer can only build one house and another can build two for the same money, it is surely time to review the way new homes are being delivered. I will, therefore, be writing to Kevin Stewart, the Scottish minister for local government and housing asking that he bring subsidies for councils up to the higher level received by housing associations and that council projects should in return be subject to the same cost scrutiny and approval process as housing associations.

“While we continue to have long waiting lists for affordable housing, the last thing we need is a delivery system which is clearly failing to maximise the use of scarce resources.”