SOCIAL Justice Secretary Alex Neil has announced £6million of new Scottish Government funding as part of plans to invest millions from pension funds to provide more affordable housing.

He revealed the cash injection yesterday as Falkirk Local Government Pension Scheme Fund awarded fund manager Hearthstone Investments £30m to invest in new social housing in Scotland.

More than 300 affordable homes are expected to be built with the Scottish Government providing an initial investment of over £6m towards 126 social homes in Falkirk and Clackmannanshire.

Hearthstone predicts its housing fund for Scotland pot will achieve £150m total investment from a number of pension funds, which equates to over 1,000 affordable and private rented homes.

Hearthstone will provide funds on commercial terms to housing associations with an appropriate credit rating to be directly invested in social housing.

The fund manager will also purchase affordable homes to be let as mid-market rent homes by housing associations, for around 10 years.

Edinburgh-based housing association Castle Rock Edinvar, which is part of Places for People, is the delivery partner for Hearthstone, and will manage the initial building programme for social rent homes.

Hearthstone has agreed a £15m loan facility with Places for People as part of the Falkirk Local Government Pension Scheme Fund investment.

The 11 Local Government Pension Scheme funds across Scotland hold investments worth more than £30billion in a range of assets that ensure they are able to meet pension payments when due.

Investment in housing is one option that the Scottish Government is keen to see pension funds explore.

Neil said: “This government has developed a range of pioneering approaches at maximum value for taxpayers’ money to tackle Scotland’s housing challenges.

“The £30m Falkirk Local Government Pension Scheme fund investment will, I believe, act as a trailblazer and encourage other Scottish local authority pension fund trustees to take the plunge and invest in housing.

“This investment demonstrates that Scotland has taken a lead in the UK at looking at new ways of funding the homes people need.

“For an acceptable risk profile, investment will provide pension funds good, long-term returns for their members and a social investment to help build stronger communities.

“In the future, the scale of investment from pension funds could be significant. We will continue to support proposals that are credible, offer scale and have partners across the public and private sector aligned and ready to work together to deliver much needed housing investment across Scotland.”

Leader of Clackmannanshire Council Les Sharp welcomed the Government cash boost.

He said: “I welcome the announcement from the Scottish Government of additional grant support and pension fund investment. As public finance is restricted, it is a priority for us to look at new ways of funding affordable housing with the minimum necessary public subsidy.”

Councillor John Patrick, convener of Falkirk Council’s Pensions Committee, said it was “great that we can build 96 properties without it having any direct financial impact” on the council.

He added: “Funding housing projects through the pension fund is an original idea and is testament to the creative thinking of the council, the pensions committee and our partners who have helped get this idea up and running.

Christopher Down, Hearthstone chief executive, said the housing fund for Scotland will help address the need for new housing and deliver over 1,000 professionally managed homes in the affordable and private rented sectors.

He said: “We are delighted to be launching this new fund in conjunction with Falkirk as the lead investor, and welcome the support expressed by Scottish Government today.

“Residential property offers stable, long-term investment returns, and has historically been a very good inflation hedge, making it ideal for pension funds as part of a multi-asset portfolio.”

Alister Steele, Castle Rock Edinvar managing director, said: “We are delighted to have brought local authority pension fund investment to increase the supply of new social housing in Scotland. It demonstrates our potential to benefit from Places for People’s financial strength and expertise alongside our capacity for local delivery.”

The Scottish Government also announced that low income families are to get a £12m boost to help them carry out vital repairs to their homes and make energy efficiency improvements.

Homeowners struggling to survive on limited incomes will benefit from the Government’s investment in a new three year Help for Homes loan scheme.

Housing Minister Margaret Burgess said: “Housing is at the heart of the Government’s ambitions to create a fairer and more prosperous country... We recognise there are homeowners who want to look after their homes and make them more energy efficient but are unable to afford to carry out work, particularly those who live in tenements. The Help for Homes funding will help homeowners with limited income to combat this.”