Launched in autumn 2015, Lar uses loan-based finance rather than traditional grant funding to provide affordable housing developments. The Scotland-wide organisation kicked off with a £55 million loan from the Scottish Government, which was then supplemented by a £65m funding package from Bank of Scotland / Scottish Widows.

Lar, which provides mid-market rental homes, is now officially opening a development at St Kentigern’s Church in Edinburgh, marking the end of its first funding phase, with housing assets of £120m now operational across the country.

Lar CEO, Ann Leslie, said: “In a few short years we have proved that an innovative funding model can have a huge impact on the affordable housing market in Scotland. We now have over 750 homes occupied across 10 local authority areas in Scotland and we are increasingly tackling complex regeneration projects breathing new life into abandoned and derelict buildings.

“The opening of this development, a difficult retrofit of an abandoned church, also marks the end of phase one of our funding. The conversion of St Kentigern’s Church into four stunning townhouses is the perfect example of what can be achieved with a bold and innovative approach. The church was a derelict eyesore on a prominent canal-side location and will now be home to a thriving community.”

The church, which was last used as a place of worship in the 1940s, has a colourful past and was previously used as a nursery and garage. It also achieved notoriety after being raided by police who uncovered a cannabis farm at the site.

The development was officially opened by Jackie Leiper, chair of Lloyds Banking Group’s Scottish Executive Committee.

She said: “The redevelopment of St Kentigern’s is a great example of what can be done while retaining and restoring the original church building alongside modern new flats, to add much-needed, quality affordable mid-market rental homes to the area.

“Supporting organisations like Lar is a key part of our aim to help more people live in the types of homes they want, in the places they want to be.”

The four townhouses, which sit alongside a new build block of 10 flats in the old church car park, benefit from a ground source heating system – highly unusual for such a tight city centre site – which involved drilling down over 200m at six points round the site. The external façade and many internal features of the church were painstakingly restored and retained.

Residents have started moving into the development, with rents for a two-bedroomed flat set at £802 compared to the EH3 postcode average of £1700.