The Highlands needs to build an extra 24,000 houses in the next 10 years to meet current and future accommodation needs.
The figure is double the amount that would normally be built in the region and would cost £2.8 billion.
It includes more than 7,000 affordable homes with 8,600 households currently on the housing register.
Why are so many homes needed?
More homes are needed in Inverness and East Ross with the development of the Inverness and Cromarty Firth Green Freeport alone predicted to bring more than 8,000 jobs to the area.
But plans for a number of hydro schemes earmarked for Loch Ness and a new power line from Thurso to Beauly means even more are required.
At current capacity it would take until 2044 to build the 24,000 additional houses.
Councillors will be asked next week to approve a Highland Housing Challenge to address the issue.
It is expected this will be formally launched later this year at a summit that will set out an action plan.
The Scottish Parliament declared a national housing emergency last month.
Other councils have also made similar declarations to recognise issues such as a lack of affordable, quality housing.
A report to the Highland Council meeting on June 27 says: “Many of the issues nationally – the lack of affordable new build supply, the rent rises in the private rented sector, pressures from homelessness demand – are also evident in Highland.
“However, the challenges faced by and within Highland need specific actions.”
Budget cuts put affordable homes at risk
It says the council has delivered more than 500 new affordable homes, on average, annually over the past 10 years.
But due to financial pressures, the Scottish Government has cut housing allocations by over 25% from about £48 million a year in 2023/24 to about £35 million in 2024/25.
If this trend continues it would reduce the number of affordable homes to around 350 a year.
Based on the current development programme of 1,200 homes a year, the housing investment over a decade would be £2.83 billion.
To double that number over the same period, investment would rise to about £5.5 billion, of which £2.1 billion would come from private investment.
It will require “creative solutions” to find new sources of investment to meet the challenge.
It includes pension funds which have been used elsewhere to build affordable housing.
The business case for the green freeport also indicates that a potential use of non-domestic rates is on infrastructure including housing.
Legacy housing from major infrastructure projects
In addition, the council wants developers building major infrastructure developments in the area to create “legacy” housing.
This would see homes used by workers later given to local people to tackle accommodation shortages and future demand.
The council says it has held positive discussions with power giant SSEN on options including creating serviced sites and the development of empty and disused buildings.
Lessons can also be learned from other areas where urgent housing schemes were built, such as the Commonwealth Games village in Glasgow.
At the same time, the council is seeking to have at least some of its historic housing debt written off.
As of March 2023, that stood at £365.2 million, some of it inherited from former district councils and associated with a house-building programme linked to the hydro and oil industries.
Housing debt is repaid as loan charges which in 2023-24 were £26.3 million. This is expected to rise to £35.1 million in 2026-27.
The council has asked to meet Levelling Up secretary Michael Gove to discuss the UK Government’s partial writing off the debt.
A similar request has been made to Labour’s deputy leader Angela Raynor.
Social housing can boost the economy
The report says: “Any debt write-off will be essential in freeing up investment which can be directed towards increasing the supply of affordable new-build housing to meet the demands of communities, particularly those which will be affected by the anticipated increase in workers as a result of economic initiatives.”
Councillors will hear UK research from Shelter and the National Housing Federation last year showed building 90,000 social rented homes would add £51.2 billion to the economy.
The economic benefits would continue in the longer term, including savings on housing benefit, reduced homelessness, increased employment and improved healthcare.
Conversation