Housing Emergency - Feasibility of Tiree Self Build Plots; Contribution to Increased Construction Costs at Occupied Phase 3 Dunbeg; Feasibility of Glencruitten Road Footpath Improvements
Argyll and Bute Council · 24 September 2025
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ARGYLL AND BUTE COUNCIL COUNCIL DEVELOPMENT AND ECONOMIC GROWTH 24 SEPTEMBER 2025 HOUSING EMERGENCY – FEASIBILITY OF TIREE SELF BUILD PLOTS; CONTRIBUTION TO INCREASED CONSTRUCTION COSTS AT OCCUPIED PHASE 3 DUNBEG; FEASIBILITY OF GLENCRUITTEN ROAD FOOTPATH IMPROVEMENTS 1.0 EXECUTIVE SUMMARY 1.1 The main purpose of this report is to request the use of Strategic Housing Funding (SHF) to support three different housing projects; which in their own but different ways will make valuable contributions to the tackling the Housing Emergency. 1.2 Dunbeg Phase 3, built by LINK RSL, was completed in August 2023, and delivered 300 affordable houses, a significant contribution to housing supply within Oban and Lorn. Like most construction projects over recent years, partly due to the Pandemic, time delays and fuel and construction cost inflation, the final development cost is above budget. Both LINK and Scottish Government have agreed to pay additional costs towards the development. Following negotiation to reduce the potential sum, it is considered appropriate that an additional SHF contribution of £175k be made to cover the additional costs. 1.3 Tiree is identified as an area of high housing need and demand and is one of the Area’s fragile populations. The Local Housing Strategy set out an aim to explore the delivery of self-build plots, and the Housing Emergency Action Plan contains an action to identify public sector land that can be used for housing solutions. Two Council owned sites on Tiree are surplus to other requirements, and following initial investigation are considered potentially suitable for the delivery of serviced self-build plots. Further feasibility studies are required to establish the details of if and how this can be done, and the costs involved, and the report requests Members approve use of the SHF to carry out this work. 1.4 LDP2 identifies a potential development area at Glencruitten Rise, Oban. The site could deliver up to 100 affordable houses, if offsite footpath improvements can be delivered along Glencruitten Road. In order to establish in detail how this might be delivered, it is necessary to carry out design and feasibility studies that will establish costs and landownership required, and the report requests members utilise the SHF to carry out this work.
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1.5 It is recommended that Council: - i. Approve a grant of £175k from SHF to LINK RSL to cover additional unfunded development costs incurred in Phase 3 Dunbeg; and ii. Agree use of up to £100k from SHF to cover feasibility studies exploring delivery of serviced self-build plots on Council owned land in Balemartine and Crossapol, Tiree. iii. Agree use of up to £50k from SHF to cover feasibility studies for delivering footpath improvements on Glencruitten Road, to facilitate affordable housing at Glencruitten Rise subject to the requirements on the developer to first demonstrate a contractual agreement with an RSL to develop the site; or provide written acknowledgment that any offsite road improvement would be financed by the development of the site as more particularly set out in para 4.23.
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ARGYLL AND BUTE COUNCIL COUNCIL DEVELOPMENT AND ECONOMIC GROWTH 24th SEPT 2025 HOUSING EMERGENCY – FEASIBILITY OF TIREE SELF BUILD PLOTS & CONTRIBUTION TO INCREASED CONSTRUCTION COSTS AT OCCUPIED PHASE 3 DUNBEG; FEASIBILITY OF GLENCRUITTEN ROAD FOOTPATH IMPROVEMENTS 2.0 INTRODUCTION 2.1 As the strategic housing authority for Argyll and Bute, the Council has a statutory duty to assess the need and demand for housing in the area and to ensure that any unmet need for housing is addressed through the Local Housing Strategy (LHS) and the Strategic Housing Investment Plan (SHIP), and these have identified the potential for self- build plots to contribute. 2.2 Following the declaration of the Housing Emergency, a key priority has been to identify public sector land which can be utilised to contribute to housing supply. In addition, there has been a recognition that the significant increase in construction costs over recent years are a challenge to delivery. 3.0 RECOMMENDATIONS 3.1 It is recommended that Council:- i. Approve a grant of £175k from Strategic Housing Fund to LINK RSL to cover additional unfunded development costs incurred in Phase 3 Dunbeg; and ii. Agree use of up to £100k from Strategic Housing Fund to cover feasibility studies exploring delivery of serviced self-build plots on Council owned land in Balemartine and Crossapol, Tiree. iii. Agree use of up to £50k from SHF to cover feasibility studies for delivering footpath improvements on Glencruitten Road, to facilitate affordable housing at Glencruitten Rise subject to the requirements on the developer to first demonstrate a contractual agreement with an RSL to develop the site; or provide written acknowledgment that any offsite road improvement would be financed by the development of the site as more particularly set out in para 4.23.
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4.0 DETAIL Dunbeg Phase 3 Increased Construction Costs 4.1 Dunbeg Phase 3, built by LINK RSL, was completed in August 2023, and delivered 300 affordable houses, making a significant contribution to housing supply within Oban and Lorn. Like most construction projects over recent years, partly due to the Pandemic, extension of the construction period, and fuel and construction cost inflation, the final development cost is above budget. The proposed final cost of construction was £62.6m, which was circa £4m above expected. 4.2 In April, LINK approached the Council to request assistance in covering the funding gap, proposing that the SHF might contribute £600k. 4.3 Members may be aware that the Council has already contributed the normal SHF award of £12k per unit or £3,600,000 in total. Notwithstanding this previous contribution, officers consider that, given the additional costs are generally in line with the wider experience of the development industry over recent years and combined with the strategic importance of the wider Dunbeg development to housing supply in the area, there is merit in considering the request. 4.4 Officers engaged with Scottish Government More Homes division and established they had offered to contribute an additional £1.478m to cover the costs. Utilising the same calculation methodology, officers proposed in principle an additional SHF award of £118k. LINK suggested that this would still leave them struggling to bridge the cost gap. Considering the ongoing strategic importance of the remaining Dunbeg development, which will be delivered by a partnership of LINK, the Council and Scottish Government, it is proposed a compromise award of £175k be made from the SHF. LINK has confirmed that sum will allow them to proceed in covering the outstanding costs. Accordingly, this report seeks approval to award LINK £175k (£580 per unit) from the SHF to cover additional Dunbeg Phase 3 costs. Background to The Housing Situation on Tiree 4.5 As of June 2025, there were around 568 homes in Tiree, of which 47% are not in use as principle homes meeting local need. 155 properties are classed as second/holiday homes, 58 homes are empty or long term unoccupied, and there are 55 self-catering units on the Rates Register. 4.6 There is a total of 43 social rent properties in Tiree, 25 are owned by ACHA and 18 are owned by WHHA (as per RSL returns 2024/25). This amounts to 8% of the total dwelling stock. 4.7 Affordability on the open market remains a significant issue for local residents. The average archived house price, based on 2023 and 2024 sales, is £174,929, which would require a household income of £49,979 to be
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considered affordable. 62% of residents in Tiree could not afford to purchase on the open market and therefore, require alternative affordable options such as social rent and shared equity. 4.8 Expressed demand for RSL housing is registered via the HOMEArgyll waiting list, and as of June 2025, there was 17 active applicants with Tiree as first preference, and 11 of these were in housing need. There are a further 3 applicants with Tiree as second or third preference, all of which are in housing need. There was a turnover of 9 social rented properties in 2024/25 in the area, resulting in a pressure ratio of 2:1 (applicants: lets). 4.9 A 2023 survey of Tiree community housing need, commissioned by Tiree Community Development Trust, received a response of 23% of Island residents. It identified a strong demand for self-build plots (22% of those wishing to move) as a first preference for people seeking housing solutions. It also identified the lack of available plots, the price of those plots that are available, and the cost of construction as limiting factors. 4.10 The delivery of housing on plots has been a traditionally important part of the new build housing delivery within Argyll and Bute. Self-build plots are considered affordable housing. 4.11 The Council’s last HNDA research and LHS stakeholder engagement identified an ongoing interest in this form of provision in a number of local HMAs, particularly on the islands, and this is supported in a recent National Islands Plan Survey (July 2021) which suggests that 45% of island residents believe that self-build is a viable option for homeownership. 4.12 The LHS states that through the SHIP process, and the Rural Growth Deal, the Council will also explore the potential for providing serviced plots for self- build projects on select sites within local authority or RSL landbanks, and this is one of the Key Actions and Targets of LHS Outcome One. The Housing Emergency Action Plan also prioritises the identification of public sector land
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that can provide housing solutions. 4.13 Although further up to date market research will be required, the provision of affordable serviced self-build plots would be an important additional tool in tackling the housing emergency, and will help contribute to sustaining remote rural fragile populations. Given the restricted availability of development land on Tiree, partly due to its crofting nature, this may be an appropriate use of the surplus land holding the Council has on the Island. Tiree Self-Build Plot Feasibility Studies 4.14 The Council owns two small surplus sites that have the potential to deliver self-build serviced plots. One is in Balemartine, and one in Crossapal both shown below Shore St, Balemartine
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Crossapol 4.15 The Council has already carried out initial Ground Investigation work that confirms the sites are potentially suitable for development. At this stage the Council needs to undertake more substantive feasibility studies, particularly the design and consenting of suitable utilities, service connections and drainage, a detailed road design which would allow for works tendering and achieving planning consent. A combined cost estimate to achieve this for the two sites is £80k, but to allow for unexpected contingencies it is proposed an allowance of £100k be approved from the SHF. 4.16 In parallel with this work officers will continue to liaise with the local community to develop better market understanding, and to explore other support mechanisms such as: availability and flexibility of mortgages, potential partners to offer modular custom build options, which would simplify arranging island construction. The Council launched a self-build register in 2024 which gives households an opportunity to register their interest in self- build. This will help us to understand more about the demand for self-build plots across the area. 4.17 When all the feasibility work is complete, officers will revert to Council for Members to consider if they wish to pursue full delivery of the self-build plots which is likely to be between 5 and 8 plots.
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Footpath Improvements To Glencruitten Road To Facilitate Potential Affordable Housing Site 4.18 LDP2 identifies a Potential Development Area (P4109) at the upper end of Glencruitten Road and to the West of Glencruitten Rise. A Masterplan was approved by the Council in 2020 which showed how the site might potentially be developed for 100 houses, subject to the identification and delivery of suitable access arrangements. It should be noted that a Masterplan consent is not a planning consent, although it would be considered a material consideration in the determination of any planning application. The suitable access arrangements would include improvements to Glencruitten Road to ensure the safety of pedestrians who currently need to use the carriageway at certain points. 4.19 The site has been identified within the Council’s Strategic Housing Investment Plan, and is a site that, in principle is likely to receive Scottish Government More Homes funding for affordable housing, if it can be delivered within their financial benchmarks. 4.20 Some or all of the access improvements that are required lie in areas outside the control of the site developer / owner. Moreover, the improvements that are required would be likely to require the Council to use its powers as the Roads Authority to implement. As such the Developer is reliant on the Council to establish if it is feasible to undertake a programme of road improvements that would deliver the required road safety improvements. 4.21 In light of the housing emergency, and particularly the projected short term lack of housing supply, the Council has given an undertaking to explore the feasibility of delivering the required Glencruitten Road improvements which could if delivered facilitate the potential affordable housing site. This work involves the design of a suitable safe footpath provision, the identification of the physical cost of those works, the identification of the land ownership required and the cost of its acquisition. It is likely that the land acquisition required will include parts of more than one residential garden, and may include residential buildings. It is anticipated that Compulsory Purchase Orders would be required to achieve this. The estimated cost of carrying out this initial feasibility work is £50,000. 4.22 This would be a phased process. Once the feasibility studies had identified a costed solution, it would be necessary to identify a funding solution. It had previously been considered this would be achieved through a Scottish Government Housing Infrastructure Fund application but this funding route has been stopped by Scottish Government. As a result, this would now most likely to be through Scottish Government More Homes Division award of grant to an RSL who proposed to deliver an affordable housing scheme on the site. As such the funding would not be able to move forward until an RSL was in control of the site. 4.23 It is officers opinion that in light of the Housing Emergency it makes sense to pursue the first stage feasibility studies which will identify the acceptable solution and costing. This will then create the opportunity for an interested RSL to explore the necessary funding. Accordingly, it is requested that Council approve use of up to £50,000 from the Strategic Housing Fund to carry out the feasibility work, although this is subject to the developer first either: • Demonstrating a contractual agreement with an RSL to develop the P4109 site West of Glencruitten Rise for affordable housing; or
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• Providing written acknowledgment that any offsite road improvement as explained in the report, in connection with the development of site P4109, would be financed by the development of the site. 4.24 Additionally, and at a later stage the Council would need to make a formal decision that it was willing to undertake a CPO and implement the road improvement works, if funding is identified. 5.0 CONCLUSION 5.1 The council is asked to approve the recommendation to award a grant of £175k from the SHF, to cover additional development costs incurred at the completed Dunbeg Phase 3 development. In addition, Council is asked to agree the potential use of up to £100k of SHF to fund feasibility studies for serviced self-build plots of two Council owned sites on Tiree. Lastly the Council is asked to agree feasibility funding of up to £50,000 to identify and design suitable road improvements to Glencruitten Road to facilitate the potential affordable housing site on Glencruitten Rise, subject to agreements outlined in the report with the developer. 6.0 IMPLICATIONS 6.1 Policy - The proposal is consistent with current Council policy including the Local Housing Strategy vision and outcomes which are directly aligned with the overarching objectives of the Outcome Improvement Plan, in particular Outcome 2 – we have infrastructure that supports sustainable growth. The proposal does exceed the delegated Officer approval for the use of the Strategic Housing Fund to enable the delivery of affordable housing which is £12,000 per unit. 6.2 Financial - There are sufficient funds in the Strategic Housing Fund to support the proposal. 6.3 Legal – None. 6.4 HR – None. 6.5 Customer Service – None. 6.6 Risk – There is a risk of depopulation, damage to the economy, a risk to delivering essential services in the local authority area if partners cannot effectively tackle the Housing Emergency. 6.7 Climate Change - making best use of existing stock by bringing empty properties back into use and installing energy efficiency measures helps towards achieving climate change targets. 6.8 Fairer Scotland Duty – the delivery of housing opportunities across Argyll and Bute facilitates social-economic opportunities for all. The activity in the report links to the Child Poverty Strategy.
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6.9 Equalities - protected characteristics - the activity outlined in the report is consistent with the aims and objectives set out in the Local Housing Strategy which is subject to an EQIA. 6.10 Consumer Duty – none. 6.11 Island Communities – one of the housing projects detailed in the report is being delivered on the islands which will provided many benefits such as employment and the continued delivery of essential services to island communities. 6.12 Children’s Rights and Wellbeing - the delivery of more housing options will enable more children to have a safe secure environment. Kirsty Flanagan, Executive Director with Responsibility for Development and Economic Growth August 2025 For further information contact: Fergus Murray, Head of Development and Economic Growth fergus.murray@argyll-bute.gov.uk Matt Mulderrig, Development Policy and Housing Service Manager Matt.Mulderrig@argyll-bute.gov.uk Douglas Whyte, Team Lead – Housing Strategy douglas.whyte@argyll-bute.gov.uk