As reported ahead of the announcement yesterday, finance secretary Shona Robison told Holyrood that the government will “invest £768 million for the Affordable Housing Supply Programme in 2025‑26, boosting affordable housing supply across Scotland and enabling housing providers to deliver at least 8,000 homes for social rent, mid‑market rent and low‑cost home ownership. This investment will help tackle the housing emergency while contributing towards our target of 110,000 affordable homes by 2032”.

The funding largely reverses last year’s near £200m cut the affordable housing budget which was met with warnings of “devastating” consequences for social housing supply and homelessness support.

The 2025-26 Scottish Budget also includes:

• a record £2 billion increase in frontline NHS spending taking overall health and social care investment to £21bn
• funding for universal winter heating payments for older Scots, and investment to allow the mitigation of the two-child cap from 2026
• tax choices that freeze income tax rates, increase the Basic and Intermediate rate thresholds
• a record £15bn for local government
• £6.9bn total investment in social security, including the Scottish Child Payment
• over £660m for rural communities
• £6m for the National Islands Plan to deliver infrastructure projects designed in partnership with islanders to support successful and resilient island communities

The finance secretary said: “I am proud to present a budget that delivers on the priorities of the people of Scotland.

“Parliament can show that we understand the pressures people are facing. We can choose to come together to bring hope to people, to renew our public services, and deliver a wealth of new opportunities in our economy.

“This Budget invests in public services, lifts children out of poverty, acts in the face of the climate emergency, and supports jobs and economic growth.

“It is a budget filled with hope for Scotland’s future and I look forward to working with all parties in Parliament to secure agreement around its provisions.”

Social housing sector responds

SFHA chief executive Sally Thomas

“Whilst no single Budget was ever going to be enough to end the housing emergency, it is hugely welcome that the Scottish Government has listened to SFHA and partners and reversed last year’s hammer-blow cut. As the cabinet secretary herself set out, having a warm, safe and affordable home is critical to eradicating child poverty.

“And beyond a one-year settlement, we hope this marks a much-needed reset on the Scottish Government’s approach to social housing. We look forward to working constructively with them to explore how they can provide a multi-year funding settlement for housing following the UK Government’s Spending Review next year.

“It’s only with sustained public investment that Scotland can benefit from the full potential of our housing associations to tackle the record levels of homelessness, reduce poverty, boost economic growth, and chart a roadmap out of our housing emergency.”

CIH Scotland national director Callum Chomczuk

“We welcome the prioritisation of social and affordable housing in this year’s budget and funding of £768m to deliver the social and affordable homes Scotland needs. This money is essential to tackle the housing emergency, kick start our building programme and deliver the homes we need to tackle homelessness.

“However, we also need the government to prioritise and maintain a long-term focus on housing in Scotland. The restoration of £200m more for affordable housing means we are still spending less in real terms than the budget in 2023/24, which was lacking at that time. Since then, we have had 13 local authorities and the Scottish Parliament all declare housing emergencies, alongside horrifying levels of homelessness presentations and children living in temporary accommodation.

“Today’s budget must be the start of a long-term and cross-party consensus on building social and affordable housing. I hope all political parties agree to prioritise building more homes and improving housing outcomes, so everyone has a safe affordable home to live in.”

GWSF director David Bookbinder

“GWSF warmly welcomes the Budget announcement, which, allowing for inflation, restores the majority of the original 26% cut to the programme. It’s the right decision after the calamitous misjudgement in slashing the budget this time last year.

“At this stage, it’s hard to comment on the claim that the 25/26 budget of £768m will fund 8,000 social and affordable homes, as the Scottish Government has yet to publish outturn data for 22/23 and 23/24 which would tell us what the average grant per new home has been in recent times.

“From now on, housing associations and councils will hope they can plan ahead with greater certainty. When momentum is hit by cuts, staff, consultants and contractors may be lost – and in some cases sites too – and activity can’t simply be ramped up at the drop of a hat.

“We also need to remind ourselves that even before the 24-25 budget cut, programme output had been substantially affected by increasing construction costs and new requirements on fire safety and other new build standards. This announcement for 25-26 is hugely welcome, but we still need to be honest about the likelihood of getting anywhere near the 110,000 homes target.”

Places for People’s chief executive Greg Reed

“Today’s £768m investment in affordable housing turns a new page for Scotland, where a worsening crisis sees every twentieth person awaiting a social home and where 10,000 children are stuck in temporary accommodation.

“The Finance Secretary’s injection into the Affordable Housing Supply Programme – reversing the devastating 2023 cuts to the budget – will pave the road to recovery for housing in Scotland and urgently kick-start the supply of 8,000 vital new affordable homes.

“But while this funding is welcome, this is just the start. A long-term and strategic approach is the only way to truly end Scotland’s housing emergency, reduce homelessness and eradicate child poverty. We welcome the Finance Secretary’s pledge to look at all the levers available to her to achieve this.

“The SNP’s recent £1m investment in homelessness prevention, alongside a winter fuel allowance for pensioners, will provide a vital shot in the arm to Communities – but a focus on existing homes is also urgently needed. A current shortfall of £20m is preventing suitable adaptations to many homes – such as stairlifts and ramps – meaning too few properties meet Customers’ needs.

“At Places for People Scotland we work tirelessly to create, support and manage thriving Communities. Last year we built 430 homes, supported over 3,200 people with financial and digital inclusion, and helped 300 individuals who were homeless or at risk of being so. But with more support we can go further and faster.

“Housing in Scotland had taken two steps back but today makes a giant stride forward. This Government grasps the enormity of the challenge and we stand ready to work together to ensure everyone has a safe, suitable and quality home.”

Kirsty Morrison, group CEO of Albyn Housing Society

“If we are to satisfy current housing need in the Highlands then there will need to be considerably more homes built. To keep up with future housing demand created by a successful Inverness and Cromarty Firth Green Freeport, it is estimated that we will need 24,000 homes over the next ten years.

“If we are to realise the benefits of this economic transformation then there will need to be a considerable increase in the number of affordable and private homes built in the area. The Finance Secretary’s restoration of the housing budget is a key part of unlocking current and future developments. This is especially important for rural areas like the Highlands where construction costs tend to be higher”

Homelessness and two-child benefit limit

The Scottish Government’s draft budget is a step in the right direction for struggling families according to homelessness charities, which welcomed the announcement of additional funding for Scottish councils, £768m for housing, £4m for homelessness prevention and plans to mitigate the two-child benefit limit in Scotland.

Andrew Connell, policy manager at The Salvation Army

“The Scottish Government has taken positive steps to address cost of living pressures facing families and individuals and plans outlined by the cabinet secretary to offset the two-child benefit limit are welcome, reflecting one of The Salvation Army’s key policy calls, for removal of this measure. We are also pleased to see additional funding for homelessness and frontline health services. Within this, we would like to see the Scottish Government, local authorities and health and social care partnerships work to ensure there is drug, alcohol and mental health support available at evenings and weekends in all local authority areas.

“Every day, The Salvation Army’s officers are helping struggling families with practical support like food parcels, school uniform banks, debt advice and employment support. We see measures like the top-up benefit payments in Scotland are helpful and urgently needed. However, this will provide only short-term relief.

“The Scottish Government has once again made a commitment to eradicate child poverty. We look forward to seeing more detailed information as the budget process continues on how these commitments will be funded. Councils must be able to plan commissioned services effectively over the longer term and ensure that their efforts, along with those of The Salvation Army and other third sector organisations, are adequately supported.”

Homeless Network Scotland

“The Scottish Government today took important steps towards addressing the homelessness and housing crisis by promising to ramp up delivery of social and affordable homes with £768m of investment next year and £4m to fund homelessness prevention pilot schemes.

“Homeless Network Scotland welcomes these commitments, which are crucial to set the foundation to improve things for people and communities now and in the long-term.

“With more resources committed to homelessness and housing, we can continue to safeguard the strong legal rights to housing we all have – rights which are the pillars of those systems. Now is the time for councils to use the increased funds coming their way to prioritise resource to make these homelessness rights a reality again.

“Money to boost homelessness prevention will help the government, local authorities, housing associations and the third sector to put meat on the bones of prevention proposals in the Housing Bill currently going through parliament.

“This funding must be used to demonstrate how the Bill’s new Ask and Act duties, which will require a wider range of public bodies to share responsibility for preventing homelessness, will work in reality. The £4m should also be used to scale up successful prevention practice already taking place in parts of the country. Everyone benefits when homelessness is reduced.

“Restoring investment in affordable housing is also welcome, particularly as the £768m announced includes a significant rise in capital spending on the homes we need.

“We applaud the political leadership behind this action, at a time of fierce and justified competition for spending – this is the right move to benefit people and communities in the long term. Last year’s £200m cut was the wrong decision and only stored up problems for the future. There is no way to ending homelessness that doesn’t involve building sufficient social housing for people.

“This time last year our sector and the people we support were dealt a severe blow in the Budget. Since then, the housing emergency has deepened and homelessness in all its forms including rough sleeping has continued to rise.

“The promise of progress offered by the Scottish Government in this Budget is welcome but represents just the start of the much bigger investment in housing and homelessness that is needed to transform Scotland into a place where everyone has a home.”

Alison Watson, director of Shelter Scotland

“We welcome the Scottish Government’s acknowledgment that last year’s cut to the affordable housing budget was a mistake. Since then, misery has needlessly been inflicted on thousands of households who have had to live first through the distress of losing their homes, and then having nowhere to turn because local services have been decimated.

“Today’s reversal of the cuts to housing and investment in local services are welcome. Now it is time for a step change in how the Scottish Government tackles Scotland’s housing emergency and the pace at which it does so.

“Of course, we accept the reality of budget pressures but if the Scottish Government wants to be taken seriously when it tells us it’s still committed to tackling child poverty then it needs to prove it is serious about ending child homelessness.

“That means showing that today’s cash can deliver change for the more than 10,000 children who will wake up facing homelessness this Christmas Day - the highest number on record and more than double the figure from a decade ago.

“Building more social homes is the only way to end the housing emergency, and the government knows this.

“Investment in social housing is investment in the people of Scotland, and generations to come.” 

Professor Duncan Maclennan, emeritus professor of Urban Economics at the University of Glasgow and professor of housing economics at McMaster University, Ontario

“The additional housing measures to attain net zero nowhere near address the problem. 

“Additionally, and oddly for a budget statement, there is no sense in which the measures will lead to better long term economic outcomes though short-term construction jobs will be boosted in welcome fashion. 

“The difficult housing outcomes that Scotland faces, across all sectors and touching middle income as well as poorer households arise from all the policies, from all orders of government, that impact the housing system. 

“These outcomes have deteriorated over the last decade and the Scottish Housing Minister’s programmes are inadequate scale palliatives in a world of big policy settings that shape an inefficient set of housing system outcomes. 

“There is nothing in the budget that addresses how housing, tax and other policies can be better governed to deliver productive, sustainable and socially just housing outcomes. Good intentions will be dashed on the crumbling foundations of Scottish housing policy thinking.”

Aditi Jehangir, chair of Living Rent

“Reversing the cuts to affordable housing is a long-awaited sign that this government is finally taking the housing emergency seriously. 

“The last decades have seen the decimation of council housing because of a lack of funding, stock transfer and right to buy. Unfortunately, this is only a reverse of previous cuts made to the budget. As a result, it is a cut in real terms when the housing crisis is ever-expanding. Sadly, £768m or 8,000 homes, is just a drop in the ocean compared to what is needed.

“Right now there are nearly a quarter of a million people on waiting lists in Scotland. This government needs to deliver more social housing by allocating greater funding for stock buyback and for social and council house building programmes, to ensure more people have a stable, secure, affordable place to live.”

Scottish Association of Landlords chief executive, John Blackwood

“Despite the Scottish Government admitting Scotland is in the midst of a housing emergency, they have decided to deal another blow to landlord investors by increasing the Additional Dwelling Supplement (ADS) from 6% to 8%.

“Instead of encouraging new investment, they seem to be going out of their way to deter new investors from buying from the many landlords who have had enough and are opting to sell. 

“In the recent Autumn Budget, the UK Government decided to increase a similar tax south of the border. 

“The private rented sector is vital to Scotland’s housing system in providing much needed homes to rent.

“By following suit, the Scottish Government is signalling clearly to the market they are not interested in new investment in Scotland.”

Timothy Douglas, head of policy and campaigns at Propertymark

“With huge demand for private rented property and long-term rent control measures contained in the Housing Bill, the Scottish Government’s decision to raise Additional Dwelling Supplement under Land and Buildings Transaction Tax from six to eight per cent is quite simply wrong and out of touch with the housing needs of Scotland. The decision leaves Scotland as the most expensive place in the UK to rent out a property and will further discourage new landlords to take on much needed private rented property to let.

“Whilst Propertymark has long called for a review of Land and Buildings Transaction Tax, and the Scottish Government has now committed to do this through the Budget, ultimately with between tenancy rent caps planned and impending minimum energy efficiency rules for private rented property, raising yet more taxes on the private rented sector will do nothing to tackle the housing emergency and only raise rents further and put the burden of these costs on tenants.”

Home builders have their say

Scotland’s home builders welcomed the restoration of the housing budget but warned that a supportive policy and regulatory environment is need to maximise the funding’s benefit.

Chief executive of Homes for Scotland Jane Wood

“Given the significant challenges which have arisen as a result of the cuts to this year’s budget, including the stalling of 7,500 much-needed homes of all tenures, the reinstatement of this funding for 2025-26 is a welcome boost in the context of the national housing emergency that was declared earlier this year.

“While the damage of this year’s cuts cannot be undone overnight, the Scottish Government must now focus on the many other wide-ranging delivery blockers that exist to maximise the benefits and potential of this new funding,

“This needs to happen at the pace which a national housing emergency necessitates, with detail now required on how the newly proposed Housing Planning Hub will be implemented and clarity needed on the outcomes of key consultations (such as the Building Safety Levy and Accessible Homes Standard) which have the potential to considerably increase costs.

As the cabinet secretary for finance and local government said herself today, the Scottish Government, given the scale of the housing challenge must ‘look at all the levers available’. HFS and its members stand ready to play their full part to move Scotland from a position of housing emergency to one in which all those who live here have the range and choice of homes that meet their needs and that they can afford.”

Susan Jackson, joint managing director at Campion Homes

“The cut to funding for affordable homes last year definitely had a significant negative impact on several social housing projects. Ultimately, this has led to delays in families being able to move into the homes they need. 

“With several Councils and the Scottish Government both declaring housing emergencies, clearly this needed to be addressed. That is why it is really positive to see this budget cut reversed. Significant barriers to more homes, both private and social, still remain, but this is a good step towards recovering the shortfall of 110,000 homes in Scotland since 2007.”

Behnam Afshar, director at AMA Homes

“While the reintroduction of funding to Scotland’s affordable housing scheme is a promising step forward, the Government has not promised much else in the way of housing for Scotland. Because of this, the UK-wide budget’s decisions on housing will undoubtedly have an impact on us here. With increased borrowing following the Westminster budget, we can expect mortgage rates to rise.

“However, as the Bank of England has knocked interest rates back to 4.75%, this will hopefully do enough to ensure the housing market continues steadily, with reports suggesting a stronger year ahead in both volumes of sales and percentage increase prices. I am expecting to see greater market confidence in general in Scotland than in England. As a devolved nation, we rely less on the workings of Westminster politics to stimulate our housing market, and I am confident we will see more home movers in Scotland in 2025.

“While England has seen a change to both the Stamp Duty rates for first-time buyers and second homeowners, we are reassured here in Scotland that the LBTT rates and first-time buyer relief will stay the same until 2026. This provides some stability for those considering a purchase in 2025 and should add a confidence boost to the Scottish market.

“While in the south, people will be spending the next couple of months trying to rush a purchase, or calling off their search entirely, here in Scotland we can expect a continuous level in interest in homebuying. While house price growth is predicted to slow in 2025, I imagine that this will happen at an accelerated rate in England, compared to Scotland, due to the difference in the Stamp Duty and LBTT payment expectations in both countries.”

Jim Baxter, financial director at Allanwater Homes

“While I welcome the reversal in cuts to Scotland’s affordable housing budget, I believe the Government could have done more to support housebuilders in Scotland. The budget could have been used to address other key challenges in the housing sector, including rising costs and supply chain disruptions. Unfortunately, the Scottish Government followed Westminster’s lead, improving minimum wages and pensions but without incentivising employers to expand workforces, and with little incentive to meet the current housing shortfall.

“However, homeownership is still an important aspiration in Scotland, and there must be support made available to first time buyers too. I would like to see the Scottish Government look to reintroduce financial support for home buyers, such as reintroducing Help to Buy or Shared Equity schemes, in order to make homeownership accessible once again for a new generation of first time buyers.

“However, there is also significant pressure on SME housebuilders to deliver. Regulatory reforms are urgently needed to address the housing pipeline, including streamlined planning permissions for residential development to enable quicker project launches and reduce delays. Equally, greater flexibility in zoning would allocate more land for residential projects, particularly in high-demand areas.

“I would also like to see the Scottish Government take a closer look at our supply chains, and support the local production of construction materials to reduce dependence on imports, and then stabilising costs to make this achievable.”

Michael Pratt, director at Timber Engineering & Invertay Homes

“Housebuilders desperately need the Scottish Government to do more to help SMEs with the broken system for financing new-build developments. Traditional forms of lending for development finance have become too restrictive and onerous for most SMEs to obtain. With land acquisition, planning, developer contributions and regulatory requirements now swallowing up so much equity at the front-end of every development it is very difficult to make the numbers stack up for ‘traditional lenders’.

“Coupled with the high level of construction industry insolvencies over the last four years, lenders are becoming very risk averse meaning developers need to commit more of their own money for longer with smaller returns. It is fast approaching a point where the ‘juice isn’t worth the squeeze’ particularly given many developers have to provide personal guarantees to secure lending. While that money is tied up it can’t be deployed on other developments.

“Scotland is in the middle of a Housing Emergency. While it’s an encouraging move to see the Government recommit to funding affordable housing, we simply don’t have enough homes for the growing needs of the country – and yet new housing is at its lowest output since 2009 which can be largely attributed to the reduction on the number of SME housebuilders.

“The Scottish Government needs to do everything it can to help SME’s grow their output and we would strongly endorse a similar Government Guaranteed scheme such as what has been proposed for England and Wales last week. It is not a silver bullet but a Scottish ‘Help to Build’ initiative could lay the foundations for a much-needed resurgence in house building in Scotland.”

Liz Hamilton, senior land and planning manager, AS Homes (Scotland) Ltd

“We welcome the decision in today’s Scottish Government budget to reverse the £200m cut to housing. This proposed cut was a hammer blow for much-needed affordable housing. We are amid a housing crisis and as a business we are poised to deliver more, but we need supportive policies to do this. More funding is key. To really unlock affordable housing we also need a massive shift to speed up the planning process and free up more deliverable land so we can actually deliver these homes.”