The pilot scheme in Glasgow, Argyll and Bute and Perthshire will provide equity loans of up to £40,000 to home owners on low incomes to help them make essential repairs to leaking roofs and building structures. This work is often necessary before energy efficiency measures like solid-wall insulation can be installed.

The funding can be used either as a single equity loan or with other existing Scottish Government grants to fund more expensive measures like solid wall insulation or a package of energy efficiency works.

Housing minister Kevin Stewart announced the pilot ahead of his attendance at the launch of Under One Roof, a new website which will provide free and impartial advice to private flat owners and help them understand their obligations when it comes to property and shared spaces.

He said: “Making sure everyone has access to a warm and affordable home is a priority for this government which is why we have committed half a billion pounds over the next four years, meaning over £1 billion by 2021, to tackling fuel poverty and improving energy efficiency.

“We know leaking roofs and poor building structures can drive up energy bills and make them more difficult to heat, but for low income households they can often be too costly to repair.

“This £10m scheme will provide households with loans to carry out essential repair work and install energy efficiency improvements.

“This will help us make homes warmer and easier to heat, with our record investment already resulting in two fifths of Scottish homes now being in the top three energy efficiency ratings – an increase of 71 per cent since 2010.”

Mary Taylor, chief executive of SFHA, said: “We welcome the announcement of the equity loan scheme. It is extremely important that we invest in the energy efficiency of existing homes to provide affordable warmth and reduce carbon emissions. It is also important that we invest in existing buildings and keep them in a good state of repair.

“We know from our members that it can be a challenge for housing associations to organise repairs and energy efficiency measures in mixed ownership properties, especially tenements with other owners in the stair. This new equity loan fund, coupled with the Under One Roof website, which the SFHA helped sponsor, provide potential solutions to allow owners to fund repairs and energy efficiency improvements.”

Lori McElroy, chair of the Existing Homes Alliance, added: “We know that households across Scotland want warmer homes, homes that are also cheaper to heat and less damp to live in. For many, the key obstacle to getting the work done is the upfront cost, even if insulation can pay for itself many times over. This pilot ‘equity loan’ scheme is therefore a key part of the solution, and can help the Scottish Government to deliver on their commitment to make energy efficiency a National Infrastructure Priority.

“If energy efficiency and fuel poverty programmes like this can help to raise the vast majority of Scottish homes to an Energy Performance Certificate band C by 2025 we can ensure that cold and draughty homes no longer condemn Scots to fuel poverty.

“It’s great news that repairs are included – so things like roof repairs are included as part of an overall energy efficiency upgrade. Without this scheme, those repair costs would be a huge barrier to being able to afford a warm and cosy home. This pilot across rural and urban Scotland should help Ministers to ensure that their proposed loan fund runs as effectively as possible when it opens for business.

“Better insulation for our homes helps to tackle some of Scotland’s most urgent issues: from cutting our energy bills, improving health and quality of life, reducing emissions and pressure on energy supply to boosting employment. Given the diverse and sometimes remote housing stock that this country has inherited, achieving these vital objectives will require long-term commitment from the Government and an ability both to innovate and to investigate best practice elsewhere. A mix of solutions will be required including grants, loans, incentives and regulation. From the perspective of the Existing Homes Alliance, today’s announcement is a significant step in the right direction.”

David Bookbinder, director of the Glasgow and West of Scotland Forum of Housing Associations, said: “It has always been clear that equity loan schemes offered by commercial companies won’t be attractive to owners. We therefore warmly welcome this Scottish Government pilot initiative which offers a really good deal for owners who have some equity in their property but can’t afford to pay regular loan interest.

“As well as facing the challenge of dealing with energy efficiency and other works in mixed tenure blocks, a number of community based housing associations would also like to work with their local council to tackle fully private tenements which are in poor condition and an increasing blight on the area. Widening the range of financial options for owners can only increase the chances of making this happen.

“GWSF very much hopes that the scheme can be expanded across Scotland after this pilot in three council areas.”