Scotland’s housing system is under pressure. As we head deeper into 2025, the evidence of strain is everywhere from the soaring number of families in temporary accommodation to rising house prices that continue to push homeownership out of reach for many.

Recent figures from Accredited Official Statistics show 16,634 Scottish households were in temporary accommodation as of September 2024, including more than 10,360 children - the highest figures since records began in 2002​.

Homelessness registrations also continue to climb, highlighting a growing crisis in both access and affordability. These aren’t just statistics, they represent real lives, families without stability and communities at breaking point.

At the same time, the Office for National Statistics has found that the average house price in Edinburgh has reached £295,000 - up nearly 10% from the year before - while prices in Glasgow and other towns and cities across Scotland continue to rise at a similar pace​.

In this environment, affordable housing isn’t just a social issue, it’s an economic one. Without meaningful intervention, we risk undermining the foundation of long-term prosperity for people and places across Scotland.

Reframing the role of Investment

Solving this crisis requires bold thinking, and more importantly, bold action. It also calls for collaboration between government, local authorities, the housing sector and financial institutions like ours.

To truly address Scotland’s diverse housing needs, and promote community well-being, an appropriate mix of housing tenures is also required. Alongside helping people to buy their own homes, we need a radical new era of investment in social housing - homes typically supplied at reduced rent to those who would not normally be able to afford it. Its absence in our communities exacerbates insecurity and inequality.

While the Scottish Government’s Housing Investment Taskforce is a welcome step – which aims to identify actions that will unlock both existing and new commitments to invest in different types of housing - the scale of the challenge means we need all sectors, public and private, working in partnership to accelerate progress.

Financial institutions have a vital role to play in funding and supporting developments that are not just affordable, but also sustainable, fit for purpose and future-proof.

At Bank of Scotland, we are proud to support organisations delivering genuinely affordable housing, providing tailored lending solutions that help bring vital developments to life. 

For example, we backed Lar Housing Trust in Edinburgh with a £65m funding package to deliver high-quality, mid-market rental homes in areas of acute housing need. In Glasgow, we supported Briar Homes with £7m worth of finance to build energy-efficient homes designed for first-time buyers and growing families. In central Scotland, we partnered with social housing specialist Kingdom Group to provide funds to help deliver the construction of 500 new homes to tackle the housing crisis. And with Wheatley Group - Scotland’s largest housing, care and property management organisation - we’ve helped fund large-scale regeneration projects through a £100 million sustainable loan, helping to transform communities through new-build housing, 50% of which are being made available to homeless households.

These partnerships are creating homes that meet a diverse range of needs, from family accommodation to supported living, while placing sustainability and community wellbeing at the heart of every development.

A catalyst for communities

What often gets lost in the conversation is just how deeply affordable housing connects to Scotland’s broader economic picture. Secure, good-quality homes lead to better health outcomes, improved educational attainment and stronger employment prospects. It enables mobility, supports productivity and reduces pressure on vital public services.

Affordable housing is a cornerstone of inclusive economic growth. Businesses rely on workers who can afford to live near employment opportunities. Both towns and rural communities need quality housing to attract and retain talent. And investors look for vibrant, thriving communities - not just physical infrastructure. Simply put, homes are essential economic infrastructure, and they should be recognised and treated as such.

Removing barriers, unlocking potential

Despite the clear benefits, barriers remain. Planning processes are often slow and complex. Land availability can be patchy. And uncertainty around long-term funding discourages investment at the scale required.

To overcome these challenges, we need to streamline approvals, provide clear and stable policy signals and create financial mechanisms that de-risk long-term investment. That includes fostering innovative partnerships - like those between banks, housing associations and developers - that bring the right mix of funding, delivery capability and community engagement.

A national imperative

If we want to build a more inclusive, resilient Scotland, then solving the housing crisis must be a national priority. Every child growing up in temporary accommodation, every family priced out of their community, is a call to action.

It’s encouraging to see ambition in the sector and we’ve been proud to help finance some of that progress. But we need to go further, faster. The opportunity to close the housing gap is still within our grasp. With the right mix of vision, investment and partnership, we can build the homes Scotland needs - not just for shelter, but to thrive.