Originally published on November 26, 2011
ARGYLL & Bute Councillor Len Scoullar has defended the local authority’s decision to approve a £1.9m loan to Fyne Homes after the social housing landlord’s failure to sell 24 newly-built flats on the Isle of Bute.
The social housing landlord has sold only one of 25 flats in the Old Courthouse development in central Rothesay. The complex – a redevelopment of the town’s former Sheriff Court building, which has retained some of its original features – took over two years to construct and the flats were originally marketed under the Scottish government’s Low-cost Initiative for First Time Buyers (LIFT) scheme to enable young first-time buyers to climb on to the property ladder.
Lack of interest
However, since the completion of the building in March 2011, Fyne Homes subsidiary Fyne Initiatives, which is marketing the one, two and three-bedroom flats, has struggled to attract buyers on the island and the housing association has widened its target market to older residents who may already be home-owners, and prospective first-time buyers not yet resident on Bute.
The Old Courthouse project was funded by grants from Argyll & Bute Council and the Scottish government, as well as private funding amounting to a £1.9m loan to be repaid after the end of the loan period on March 31 2012. Fyne Homes expected to repay the loan from the proceeds of the sale of the properties but after the difficulty it encountered in selling the flats the company applied to Argyll & Bute Council’s Strategic Housing Fund for a bridging loan of £1.9m – sparking criticism from local residents on Facebook page, HaveYourSay On Bute.
Users of the page expressed concern that Fyne Homes’ inability to repay the original loan meant it would be equally unable to repay Argyll & Bute Council, while others were unhappy that the council could allocate a loan of £1.9m to another organisation when council services were under so much pressure from budget cuts.
“Sound” financial position
In response to concerns that the money could have been assigned to other needs on Bute, Argyll & Bute Councillor Len Scoullar said: “The answer is simple in that the council, as the Strategic Housing Fund name implies, must use the monies for housing. This money comes from the council tax raised on second homes in Argyll & Bute and is strictly controlled by government in its use and is not allowed to be used for any other purposes which are not approved by government.
“I also can say that Fyne Homes’ financial position is in fact very sound, I have seen their balance sheet and they will be more than able to repay the loan.”
The loan from the council will run from March 31 2012 for a three-year period but may be repaid earlier if the remaining 24 properties are sold before the loan period expires.
“I must emphasise that the money is not being used to “market” anything but is in fact only a replacement of the bank loan and will run with interest for the three years,” Cllr Scoullar continued.
“I am delighted that the council loaned Fyne Homes the funding from the Strategic Housing Fund – a decision that I was very much involved in. This was as a result of me being the person who persuaded Fyne Homes to take the building in the first place and not leave it as an eyesore, slowly getting worse in one of our very prominent spots next to the castle which would have cost the council a fortune to deal with.
“All in all I think it is a good use of the money, always remembering that Fyne Homes took the liability from the council who would have had a six or seven figure sum of money to find from local funding just to make the building safe three years ago.”