Appendix 2 - Mid-Market Rent FAQ
Perth and Kinross Council · 29 April 2026
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Appendix 2 Mid-Market Rent (MMR) FAQ’s Q. Do we really need MMR, when social housing is better and cheaper for people? A. Yes, MMR is needed wherever rents are much higher than Local Housing Allowance (LHA) rates, and this is clearly the case in some housing market areas in Perth and Kinross. Beyond that, MMR has been delivered in areas where rents are not substantially higher than LHA rates and these have still proved very popular. This shows that there is an identified need in some parts, but demand everywhere. MMR is not a substitute for social housing, it targets households who are unlikely to be allocated a social housing tenancy, but whom have a housing need and often approach our service for housing options assistance. Q. Will MMR properties reduce the number of social houses being built? A. No, the current Local Housing Strategy states 210 new affordable homes per year are needed. 70% of those are to be social rent with 30% of those to be either mid- market rent or low-cost home ownership, and this target will not change. Delivering MMR helps to achieve the 30% target and compliments the delivery of social housing, rather than replacing it. Q. Why do PKC need to do MMR, can we not just insist that the Housing Associations do more? A. As Strategic Authority, we can prioritise the delivery of MMR, though this still relies on partners doing it at the scale that we would want and in areas we would want. There are however competing priorities in terms of type of affordable housing being delivered such as adapted, supported etc. Having the capacity to do MMR ourselves gives us opportunities we do not have right now. Developing large scale developments requires a mix of tenures to create sustainable communities and so having the ability to deliver MMR will complement our PKC programme. We can also grasp smaller, off the shelf opportunities not suited for social housing. Q. Fife Council have a leasing arrangement with other Housing Associations, why can we not do the same? A. We can, though this is not the typical approach Local Authorities take to deliver MMR directly and does not offer us the control over management of the properties. This was a temporary measure to enable the formation of an LLP and so proposal is to deliver MMR directly using the mainstream approach to doing so. A leasing arrangement would not allow for PKC Lets to manage the properties and accrue income, and so would be an opportunity missed. Q. Why does it need to be an LLP? A. We have procured external legal advice on this matter and the advice is clear that the LLP is the appropriate type of legal entity to create to deliver MMR. PKC cannot issue Private Residential Tenancies for ourselves and so we need a 2nd member to provide the necessary separation from PKC to enable these tenancies to be issued. The LLP model is the one used by other local authorities.
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Q. An LLP seems complicated, how do we ensure all legal requirements are met and adhered to? A. External legal adviser, Burness Paul, have been procured for initial advice and for after LLP is approved, to provide the necessary oversight ensuring that the LLP will meet all legal requirements. They are there to support the PKC legal service, who will oversee the actual legal arrangements. This has been budgeted for as part of start-up costs. There is also scope for procuring external financial advice to adhere to financial regulations, should finance team decide that is necessary. Q. Who will the 2nd Member organisation be? PKC have several options though first preference would be Scottish Futures Trust, though they have their own approval process for agreeing to be a 2nd member. They have, so far, not committed to us, though have been open to considering the proposal. This would enable the LLP to be established and allow us the opportunity to demonstrate how the LLP works to prospective 2nd members. Scottish Futures Trust would only agree to this in short term and so work will need to commence early on to identify the 2nd member that this would be thereafter. The external legal advice also specified what type of 2nd member organisation we can partner with, this will ensure that whomever we choose, the LLP will be a legally competent member. Q. Who is responsible for managing the LLP? A. PKC staff will operate the LLP as it will have no staff. PKC Lets will undertake the day-to-day management of the stock. A fee for these lettings' agency services will be paid. Beyond this, there will be a Lead Officer coordinating a working group of Officers from Legal, Finance, Housing, and Property to oversee the operation of the LLP itself. This group will report directly into the Board. Each Officer will have a different role, with varying levels of input, within the ongoing management of the LLP, summarised below. Team Leader, Housing Strategy (Lead Officer) – Coordinating role ensuring that all operational requirements are being met. Establishing working group meetings, providing board / committee reports, and ensuring a link between the varying departments. Solicitor, Legal and Democratic Services – Oversee the external legal advisors providing advice on startup. Thereafter providing ad hoc legal advice and assistance, within the parameters of what is appropriate, to the working group as part of ongoing operations. Team Leader, Finance – Oversee the establishment of the financial ledgers for the operation of the LLP and ensure payments can be made for services performed by PKC. Thereafter, providing budget monitoring statements from the LLP accounts to the working group ensuring that performance can be reviewed against targets by Lead Officer. Service Manager, Repairs and Improvements – Reactive repairs. Properties will be placed on PKC repairs schedule, as per council houses, and repairs done in same way. The cost of repairs will be paid for by the LLP. The role involves feeding in any issues with the repairs scheduling.
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Capital Projects and New Build, Service Manager – Large cyclical repairs. Properties will be placed on cyclical maintenance programmes as per PKC housing. This will not be needed for the first 10 years, though costs will be paid for by the LLP. Q. Will the LLP have a board, and if so, who sits on it? Yes, it will have two boards. However, the make-up of the boards will be agreed through the members agreement and so may vary depending on who the 2nd member is. A proposed board structure model would look like the below. 1. Board of Members. This is the main board that makes specific decisions about the LLP and sets its direction. It is made up of representatives from PKC and the 2nd member organisation. The PKC voting always outweighs that of the 2nd Member so that control is retained by PKC. Elected Members can sit on the Board of Members. There is an obligation on members to make decisions based on the best interests of the LLP Suggested participants include Strategic Lead, Housing and Communities, Strategic Lead, Economy, Development, and Planning 2nd Member Representative. Elected Members 2. Board of Management, or Senior Management Team (SMT) sits beneath the Board of Members and will oversee the day-to-day management of the LLP. This will be made up of senior management within PKC and representative from 2nd member organisation. The Lead Officer reports into this board. Suggested participants include: Strategic Lead, or Service Manager Housing and Communities Strategic Lead, or Service Manager Finance and Business Support Strategic Lead, or Service Manager Legal and Governance Strategic Lead, or Service Manager Economy, Development and Planning Strategic Lead, or Service Manager Property Services 2nd Member Representative There will be an obligation on all board members to review board reports, and act in the best interests of the LLP. Q. Who will do the LLP’s accounts? The ongoing financial management of the LLP will be done by the working group with budget monitoring by the Finance team feeding into the board reports. The proposal is that financial accounts will be reported to SMT for approval before being submitted by Strategic Lead, Finance. The initial tranche of properties is 13 and so
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financial arrangements should be straightforward to manage, however as the assets accrue, the ongoing financial oversight may need to be outsourced, paid for by the LLP. Q. Who will manage the actual properties? A. PKC Lets will manage the properties. They currently offer lettings agency services and so will take up this role on behalf of the LLP, for a fee. The maintenance of the properties will be undertaken by PKC, again with the cost paid for by the LLP. The properties will be added to planned maintenance cycles with a fee being paid for this. They will also be added to routine maintenance cycles, again for a fee. Any repairs to items such as white goods, blinds etc will be coordinated directly by PKC Lets. The LLP will have a budget for reactive repairs each year, which increases each year with inflation, and this will be used part of budget monitoring. Income will be held back to pay for future cyclical maintenance and replacements also. Q. Why does the LLP need a general fund loan to part fund the upfront capital cost, rather than the HRA? A. The HRA is prohibited from lending to the LLP. Whilst Scottish Government approval is needed to do so from general fund, this is the typical approach for Local Authorities to directly deliver MMR and so getting approval should be straightforward. Q. Does it have to be general funded, is there no other funds that can be used? A. Council Tax 2nd / Empty Homes has been used by Shetland, but the funding required would lead to a large reduction in monies available and this fund is needed to support wider delivery of affordable housing programme. Private finance can be used however this requires an interested private sector partner and substantial negotiation and so this avenue will be pursued once the LLP is established. Q. How can PKC justify using general fund monies for affordable housing, when budgets are so tight? A. Whilst the general fund will be ‘on lending’ £1.38m, there will be no detriment because this will be paid back with the interest charges covered and so it is being lent on a no detriment principle. The LLP will pay PKC Lets, a general funded service, a management fee for managing the properties and so there are also opportunities for generating income for the general fund. If there is a default on re- payment, the properties can be purchased by HRA and converted to social housing with loan repaid in full. Q. How long will it take to pay the loan back? A. The loan, with interest, will be paid back over a 30-year period. If the LLP accrues profit quicker than anticipated, then there will be option to increase payments, however the plan would be to pay back over 30-year period, and it has been appraised on such a basis. Q. What appraisals have been done to assess the financial viability of this proposal?
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A. A development viability assessment has been undertaken and established that the proposal stacks up financially, and furthermore, there are identified exit strategies should something go wrong. Q. Has there been a Business Plan or Growth Strategy developed to show plans beyond the first 13 properties. A. The aim is to begin with the first 13 as a starter to learn lessons that will inform the LLP’s growth. However, there is an aspiration to increase stock levels by 25 new homes per year to help achieve the Local Housing Strategy targets to deliver MMR. Once the LLP has been approved, a Business Plan, or Growth Strategy, will be set out in detail to identify how this aspiration will be achieved. The strategy will be provided as part of the update to Housing and Social Wellbeing Committee and will set out the funding opportunities available, future identified sites proposed, as well as staffing implications. Q. How can we be assured that the LLP will not make risky investment decisions that place it at risk. A. The governance structures in place will ensure that any new opportunity to expand stock are considered by the appropriate council officers, with general oversight of the LLP by Housing and Social Wellbeing Committee. Any future borrowing would need to be approved at Committee, so that there is appropriate oversight over future investment decisions. The nature of this investment will dictate which committee will approve it. More General Fund borrowing – Perth and Kinross Council Committee Private investment – Finance and Resources Committee Council Tax 2nd / Empty Homes – Housing and Social Wellbeing Committee