Housing / Depute leader thinks SIC may ‘struggle to finish’ Knab project without extra housing funding
SHETLAND Islands Council (SIC) may struggle to complete its Knab redevelopment project without seeking additional funding for housing, according to its deputy leader Gary Robinson.
He issued the warning at a council meeting on Monday amid continued concern over indications that the Scottish Government’s affordable housing budget for Shetland will reduce over the coming years.
The update report presented to the SIC’s policy and resources meeting also confirmed £1.3 million had been earmarked for the Knab project from a Scottish Government housing infrastructure fund – but this has now been removed from budgeting.
A spokesperson for the SIC said that “during the pre-application process and discussions with the Scottish Government, it was confirmed during 2024 that there would be no new bids accepted or allocations made to the housing infrastructure fund going forward”.
As it stands the SIC could have to pay £4.1 million in total from its own reserves for infrastructure work plus housing design – should it be successful in drawing down already-committed islands deal funding early.
Councillors have also been told that the use of a historic former Anderson High School building remains unclear after it was decided that plans for a creative arts hub would be “unsustainable”.
Feasibility work to consider alternative future uses of the Anderson Educational Institute is ongoing, according to a report presented to councillors. It had been due to be used by Shetland Arts.
The Institute building is one of three B-listed properties remaining on the former school site following demolition as contractors cleared much of the site in preparation for a redevelopment, which includes housing.
At Monday’s meeting councillors agreed a revised timeline for the project, which has been affected by the proposed reduced funding for housing from the Scottish Government.
It is now proposed that construction work on the first main housing phase at the Knab will only take place in 2027/28.
However, a revamp of the Janet Courtney Hostel – one of the remaining listed properties – to create flats will be prioritised, with work expected to begin on the building in January 2026.
Before that, infrastructure work worth £4.7 million is due to take place to prepare the former school site.
That job is currently out to tender, with a deadline for bids in early December.
This includes drainage, water and cabling work, as well as a new access road between Gressy Loan and Lovers Loan, incorporating up to 46 car parking spaces to the rear of the Anderson Educational Institute.
The Knab project is being supported by the UK and Scottish governments’ joint islands deal, with the bid worth up to £9.6 million in total.
The Scottish Government has indicated it could consider the early drawn down of islands deal funding for the infrastructure works and housing design.
This could be worth just over £1.5 million through to 2026/27.
Even if this is successful, the council still stands to be in line to pay £4.1 million from its own funds to get the project up to the point where housing can be built, as the total cost of the work is estimated at £5.685 million.
However a cloud hanging over the project is the Scottish Government’s plan to reduce funding for housing over the coming years.
At Monday’s meeting Robinson, and Shetland Central member Moraig Lyall, expressed deep concern about the funding situation for housing and the impact this could have on the Knab.
“We need to seek out any money we can for housing to bring in and to try and push this project on, otherwise I think we may struggle to finish it,” Robinson said.
He also noted how the islands deal funding is not inflation-proofed, meaning the value of the funding designated for the Knab development has “diminished”.
This is an issue which the councils in Shetland, Orkney and the Western Isles have previously raised concern about.
Meanwhile SIC leader Emma Macdonald said the need for housing in Shetland was well understood and noted how the Scottish Government’s 2025/26 budget is being presented for the first time on Wednesday.
Regarding the priority placed on housing, the councillor hoped that the budget will show government budgets “moving back in that direction”.
The new Labour UK Government has said Scotland stands to receive an extra £3.4 billion overall for 2025/26.
Development committee chairman Dennis Leask described it as a “complex project” involving numerous partners, while he also reflected on how critical more housing is for Shetland.
Separately, the Knab report also confirms that the final cost of the project initiation and demolition reached £3.874 million.
The demolition costs had previously increased from initial estimates, at one point rising from £1 million to £2.454 million.
There are four buildings left on site at the moment – the Educational Institute, the Janet Courtney hostel, the Bruce Hostel and the science block.
The report to councillors highlighted that plans for a creative hub in the institute building is not likely to happen despite it being an “integral part” of the islands deal, with £3 million of funding potentially associated with it.
“It is now increasingly clear that this building would be less than ideal for this purpose and that, even with energy efficiency improvements, would result in unsustainable levels of rent and utilities costs for tenants,” the report said.
“Council officers are supporting Shetland Arts Development Agency to develop alternative proposals, which may still be on the Knab site.”
A council meeting previously heard that it was suggested that staff from children’s services at Hayfield House could move into the institute building in the future, but nothing had been confirmed.
Monday’s meeting heard from development director Neil Grant that there is also funding earmarked for student accommodation in the islands deal package but discussions are underway to see if more of the arts funds can be put into student accommodation.
Assets, commissioning and procurement Robert Sinclair said a lot of the £3 million mooted for the arts hub was on improving the fabric of the institute building.
The Bruce Hostel, which is also listed, does not have an identified future use – and its condition is deteriorating.
The SIC has been approached by parties interested in buying the building.
However, title conditions of the building meant an application had to be made to the Court of Session in Edinburgh to change the property’s use or to sell it.
The report to councillors said the court’s decision should be known soon. Elected members gave their approval for the building going up for sale when the green light is given.
The Janet Courtney Hostel is proposed to be using as housing as a mix of one, two and three bedroom flats.
It was previously identified as possible UHI student accommodation but the report says that – due to likely changes in the university’s operating model – the organisation will need to reconsider options for student accommodation.
The science block, which is newer and not listed, is now in the ownership of the New Life Shetland church following a community asset transfer.
Pupils moved out of the former Anderson High School back in October 2017 and transferred to the new build at the Clickimin.
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