Lar Housing Trust was launched in October 2015, with a £55 million loan from the Scottish Government, aiming to prove a concept that 100% loan-based funding could help provide additional high-quality affordable homes across Scotland.

The charity says its model has provided fantastic value and returns to the public purse, whilst consistently delivering an average saving to tenants of more than £3,100 per household in rent savings per annum. That is the equivalent of £260 per month to each tenant and more than £2.3M per annum in total – more than £10M of total public benefit over the past five years of operation alone.

To deliver this and from a standing start, Lar now has 754 completed mid-market rental (MMR) homes across 10 different local authority areas and has supplemented its initial government loan with £65 million of private finance from Bank of Scotland/Scottish Widows. Lar has provided one new home every three to four days since its launch.

Chief executive, Ann Leslie, said: “Lar really started out as an experiment and our goal was to prove that the concept of 100% loan-based funding could work. We have now completed pipeline 1 and have spent or allocated the £120m we had available.

“Lar has also grown and diversified with two subsidiary companies providing everything from construction to lettings management and community facilities. Crucially, unlike previous housing initiatives, Lar tenants also have a home for life, should they want it, since Lar owns all of its residential properties, thus ensuring that Lar’s homes will remain in the charitable sector in perpetuity.  Tenants are at the heart of everything we do and we are immensely proud to have provided safe, warm homes that people can be proud of, helping them put down roots in their own communities.”

One of the tenants to benefit is Edinburgh-based taxi driver Val Wyllie. After several years living abroad, she returned to Scotland and struggled to find a home to rent. She spent seven years relying on friends to put her up, before she was introduced to Lar by the City of Edinburgh Council’s Homelessness Team and she now lives at one of Lar’s Edinburgh developments.

She said: “The most important thing to me is having my own space to call home. I couldn’t be happier here and Lar has literally changed my life.”

Reports highlight that not only are Lar’s units additional to grant-funded schemes but that they also offer excellent value for money. Comparing Lar’s actual costs to published Scottish Government figures shows that the average initial net public sector investment per unit of building a Lar home stands at £59,571 compared to grant-based funding of £76,724 for registered social landlord MMR units.  Over the 25-year loan period and because the original loan capital is repaid, the cost of a Lar home drops to £30,978 of public sector investment.

The low-cost loan Lar received from the Scottish Government, when combined with the private funding raised, brings down the weighted average cost of finance, thus allowing rents to be kept at the MMR level. Unlike grants, loans are repayable which allows multiple units to be supported as repaid loans can be re-lent.