A new report by CaCHE, in partnership with SFHA, CIH Scotland, and Shelter Scotland, projects that Scotland must deliver 15,693 affordable homes per year between 2026 and 2031 to meet national need – an increase of almost 50% on current targets.
This analysis reflects growing pressures across the housing system: rising homelessness, worsening affordability, constrained turnover in the social rented sector, and a backlog of unmet need. The call for a step-change in delivery and investment has significant implications for local authorities, housing associations, and development partners.
Key Findings
- Annual affordable housing shortfall: 15,693 homes
- Backlog of unmet need: 13,917 homes annually to clear
- Newly arising need: 27,891 households each year
- Estimated available supply: 26,809 affordable lets/resales per year
- Required investment: £8–9.2 billion over five years
- Estimated funding need: £1.64 billion per year
Market Context: Delivery Challenges
The sector’s ability to meet these targets is increasingly constrained by delivery challenges — particularly for private developers and SME housebuilders, who play a key role in Section 75 agreements and land-led schemes.
Across the board, viability has worsened due to:
- Construction cost inflation
- Rising finance costs
- Delays in planning and utility connections
- Slower sales rates leading to greater risk exposure
Without greater flexibility in funding, tenure options, and delivery models, many developments will struggle to move forward.
Lessons from England
While challenges remain acute south of the border, England has adopted a wider range of delivery models in recent years, including:
- The use of for-profit registered providers and institutional investment
- Growth in affordable home ownership and mid-market rent
- Strategic partnerships and land-led joint ventures
- A stronger emphasis on viability-led negotiations to unlock sites
Scotland can take lessons from these developments while adapting them to its own policy context and longstanding emphasis on social and community-led housing.
Moving Forward
Meeting post-2026 demand will require a collaborative, multi-tenure response, involving:
- A renewed focus on social rent in high-pressure areas
- Better alignment of land strategy, infrastructure funding, and affordable housing delivery
- Greater support for delivery partners to navigate planning, cost inflation, and market risk
- Space for innovation in tenure and construction — including a Scottish shared ownership model, custom build, and off-site delivery
At Highlight, we believe part of the solution lies in removing friction from the delivery process – offering clear, commercially-minded support across sales and development, while helping to strengthen partnerships that bring more good-quality homes to market.
📘 Source: “Affordable Housing Need in Scotland Post-2026” (2025), authored by CaCHE in partnership with SFHA, CIH Scotland, and Shelter Scotland.