Campaigners have renewed calls for more affordable housing and rent controls after it emerged private flats in a former public building were being let out for “completely unaffordable” prices of up to £2,500 a month.
Flats in the former Boroughmuir High School – sold to developers CALA by the City of Edinburgh Council in 2015 for £14.5m – have recently appeared on the rental market.
Housing campaigners have reacted angrily, with tenant’s union Living Rent claiming the high prices demonstrate “why we have a housing crisis in Scotland”.
The housing charity, Shelter Scotland, called for investment in social housing in the capital while others said rent controls, a ban on absentee overseas landlords and a transparent property ownership register were needed.
In May, we revealed that CALA had bought 12 per cent of the £500m of land sold by Scotland’s public institutions in recent years, with many sites used to build luxury homes.
CALA bought the Edinburgh High School building in Bruntsfield, outbidding community group Out of the Blue which hoped to develop an arts hub in the school featuring studios, performance areas and workshops.
CALA is now offering buy-to-let investors “a healthy return” if they purchase its new one to four-bed upmarket Boroughmuir apartments, which cost between £480,000 and £845,000.
The developer is also offering up to £11,370 as an “investor incentive package” to guarantee prospective landlords their first six months’ rental income.
The partially-completed apartment complex will consist of 87 luxury apartments and 17 affordable flats on behalf of Link Housing Association. CALA will also provide council funding for a further nine affordable flats elsewhere. It says these will be the first affordable flats built in the area for decades.
But Living Rent’s Muireann Crowley claimed that the luxury end of the housing market was always given precedence.
The profitable developments are “consistently favoured over desperately needed social housing”, she argued. “Low and middle-income workers are being systematically priced out of the city centre.”
Living Rent has long called for proper rent controls to bring private rents down in Scotland and disincentivize buy-to-let landlordism.
Meanwhile Shelter Scotland warned that the capital’s city centre and neighbouring council areas “have the highest levels of unmet need”.
Alison Watson, director of Shelter Scotland added: “The private market has long been beyond the means of far too many, especially in property hotspots like Edinburgh.
“We need to see more affordable homes, and particularly social homes built in areas where they are in greatest demand.”
‘Absentee overseas investors’
In 2019 CALA sold Boroughmuir flats to investors in the tax haven of Hong Kong months before offering them to domestic buyers, according to reports by the Edinburgh Evening News. Tax haven firms have already bought up many of the capital’s most iconic buildings, a 2020 investigation by The Ferret revealed.
Labour MSP Paul Sweeney said buy-to-let property investment siphons “potentially billions of pounds” from public revenue. He called for similar measures introduced by the New Zealand government restricting absentee overseas investors from owning residential property, and for a transparent property register.
“[Buy-to-let] is seen as a very low-risk, high return model where developers act as a sort of commercial housing association, rather than being tenant controlled or tenant accountable,” he said.
“It’s basically accountable to a bunch of faceless investors from abroad. It’s a new feudalism on an international scale.”
CALA told The Ferret “the majority” of Boroughmuir’s buyers were from Edinburgh. Its plans could bring a £45m boost to the area, according to a report by consultants Lichfields.
Councillors voted overwhelmingly to accept the developer’s £14.5m bid for the property in 2016, with more than 20 offers reportedly received.
But Sweeney believes Edinburgh council could have developed Boroughmuir into accommodation itself. He highlighted that Glasgow City Council has its own construction firm, City Building, which “could be expanded to become a property developer in its own right.”
“In the context of disproportionate cuts to local authorities across Scotland, we’re seeing councils flogging assets for quick returns, even though they’re being developed for several multiples of the actual price they’re being sold for,” said Sweeney.
“It seems like such a short-sighted and value-destroying fire sale of public assets. The income should be coming back to the city, not some private developer or to property investors from overseas”.
Flats for professionals and investors
A spokesperson for CALA Homes, said: “While preserving a landmark building within Edinburgh, our Boroughmuir development is providing a range of new homes that are appealing to first time buyers, professionals, downsizers and investors”.
They continued: “The development is boosting the private housing supply at a location that hasn’t seen new homes brought to market on this scale for decades.” The spokesperson added: “These will be the first affordable homes delivered in the Bruntsfield area for close to 70 years.”
Councillor Cammy Day, Edinburgh City Council’s deputy leader, said: “We always look to get best value for our residents when selling our surplus buildings to make sure we can continue to invest in and improve the services we provide across the city.”
Funds from the Boroughmuir sale helped fund the school’s replacement plus a new gym and nursery for Leith Primary, he claimed.
The council is committed to providing 20,000 affordable homes over ten years. “We have one the biggest council-led housing building programmes in the UK,” added Day.
Photo Credit: iStock/Circle Creative Studio