Scottish government invests £10m in a charitable bond to provide affordable homes

The bond has been issued by the community benefit society Allia and will provide money for Places for People Homes and the People and Communities Fund

The Scottish government has invested £10m in a charitable bond aimed at developing affordable homes.

In a statement, the Scottish government said it would invest in a charitable bond issued by the community benefit society Allia.

A Scottish government spokeswoman said it was charging Allia 0.1 per cent in interest on the £10m investment and would receive a repayment of £10.5m once the bond was repaid at the end of five years.

The bond would create an £8.6m loan for Places for People Homes to develop 150 affordable homes in Scotland, a statement from the Scottish government said.

The interest on this loan over five years, it said, would be enough to allow the entire value of the bond to be repaid to the government.

The remaining £1.4m would be distributed in grant funding through the People and Communities Fund – a government fund that supports community organisations – the Scottish government statement said.

The spokeswoman said the fund would support about 15 different projects and charities.

Phil Caroe, chief operating officer at Allia, said that by charging fixed rates of interest, Allia was able to pay directly to the People and Communities Fund the amount of interest it anticipated making over five years. "We can take the future interest and give that away up front," he said. 

Members of the public will be able to invest additional funds in the bond, which would increase the overall amount available for charities.

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