The Scottish government is investing £10m in a charitable bond, £8.6m of which will be lent to a housing association to enable it to build 150 affordable homes across central Scotland.

The bond has been developed by Allia and will also generate £1.4m in grant funding for the oversubscribed People and Communities Fund, which supports community-led regeneration projects.

Under existing loan facilities with Allia, around £8.6m of the £10m will be loaned to Places for People Homes Ltd, a subsidiary of the Places for People Group. The loan repayments will then be used by Castle Rock Edinvar Housing Association, also a member of the Places for People Group, to build 150 new homes.

The £10m is part of an additional £290.8m of loan and equity investment to come out of the UK Budget, which must be repaid to the UK government. The interest generated from the loans will provide the £1.4m grant funding, which does not have to be given back to the UK government.

With this investment, the Scottish government has become the first major investor in a charitable bond in the country.
Later this year, the bond offer will be opened up to members of the public, with a view to increasing the overall amount available to charities.