Housing (Financial Provisions) (Scotland) Act 1972

55 The new building subsidy

(1) This section has effect, subject to section 56 of this Act, as to the circumstances in which new building subsidy is payable to a housing association and the amount of new building subsidy so payable.

(2) A housing association shall be entitled to new building subsidy as provided by the following provisions of this section and section 56 below, in respect of a building scheme approved by the Secretary of State for the purposes of this section if they incur an initial deficit on it.

(3) In this section and section 56 of this Act " building scheme " means a scheme approved by the Secretary of State for the erection by a housing association of a house or group of houses for the purpose of letting or for any purpose which in the opinion of the Secretary of State is comparable, and also includes the provision of other buildings or land connected with the requirements of the occupiers of the house or houses comprised in the scheme.

(4) Subject to subsection (11) below, and to subsections (2) and (3) of section 56 of this Act, new building subsidy shall be paid to a housing association for ten years, namely the year of completion of the last or only house comprised in a building scheme (in this section referred to as the " year of completion ") and the nine years immediately following, and the amount of subsidy for a year shall be the percentage of the initial deficit shown for that year in the Table in subsection (6) below.

(5) For the purposes of this section—

(a) a housing association incur an initial deficit on a building scheme if their income from the scheme for the year immediately following the year of completion is less than their approved expenditure on the scheme for that year;

(b) the income from a building scheme for the year immediately following the year of completion is the income which would be obtained for that year from all the buildings and land comprised in the scheme, assuming, subject to subsection (8) below, that every house so comprised were let for the whole of that year at a rent equal to the amount which would be registered as a fair rent for the house under this Part of this Act;

(c) the approved expenditure on a building scheme for the year immediately following the year of completion is the association's expenditure on loan charges in respect of the expenditure on the scheme and on the maintenance and management of the buildings and land comprised in the scheme.

(6) The following is the Table referred to in subsection (4) above:—

TABLE

Year for which subsidy is payable	Percentage of initial deficit to be met by subsidy
Year of completion	100
Second	100
Third	100
Fourth	60
Fifth	60
Sixth	60
Seventh	30
Eighth	30
Ninth	30
Tenth.	10

(7) Income from and approved expenditure on a building scheme shall be estimated in such manner and on such evidence as the Secretary of State may from time to time direct in the case of associations in general or any individual association or description of associations.

(8) The Secretary of State may direct under subsection (7) above that paragraph (b) of subsection (5) above shall have effect with the substitution for the assumption specified in that paragraph of such other assumption as may be specified in the direction.

(9) In any case where a housing association are entitled to new building subsidy but are precluded by their rules or constitution from charging a rent for their houses, the reference in paragraph (b) of subsection (5) above to the amount which would be registered as a fair rent shall be construed, in relation to the association's houses, as a reference to the amount which, in the opinion of the Secretary of State, would be registered as a fair rent if those houses were available for letting at a rent.

(10) In any case to which subsection (9) above applies the Secretary of State may assume, without prejudice to subsections (7) and (8) above, that the houses would be let on such terms and in such circumstances as he considers appropriate.

(11) The Secretary of State shall consult with such bodies representative of housing associations as he considers appropriate—

(a) before giving a general direction as to the method of estimating approved expenditure;

(b) before determining, in any case to which subsection (9) applies, the assumptions as to letting which are to be made under subsection (10) above.

(12) If a housing association, by furnishing to the Secretary of State such information as to their financial position as he may require, satisfy him, in relation to a building scheme, that for any year except—

(a) the year of completion, or

(b) the second or third year for which new building subsidy is payable,

payment of an amount of subsidy equal to the percentage of the initial deficit shown in the Table will be inadequate, having regard to their normal sources of income, to enable them to meet such expenditure (including loan charges) as in his opinion it would be reasonable for them to incur for that year in the exercise of their housing functions, he may direct that for that year the percentage of the initial deficit to be met by subsidy shall be greater than that shown in the Table but not greater than 90 per cent. or than the percentage met by subsidy for the immediately preceding year, if that was less than 90 per cent.