An £850,000 taxpayer-funded loan to the owners of a derelict Fife hotel has still not been repaid in full.
Kapital Residential bought the Lundin Links Hotel in 2014 and secured planning permission to convert it into 35 flats.
Despite work not starting, the company received Scottish Government cash under the Emergency Covid Liquidity Fund in 2020.
The £18 million fund was set up to protect jobs and suppliers in the housebuilding industry during lockdown.
However, Kapital went bust in July 2022, three weeks before the deadline for repayment.
And the prominent mock-Tudor building was destroyed by fire the following month.
It has now emerged liquidators who sold the land have repaid £381,699.70 of the outstanding loan.
The Scottish Government confirmed it is still owed £347,230.30.
However, they said the liquidation process is ongoing.
Total loan cost to taxpayer not known
The covid loan was originally secured against two properties owned by Kapital.
One of the properties was sold in 2021, meaning the entire amount was then secured against the derelict Lundin Links Hotel.
The Scottish Government has declined to release the building’s valuation on the grounds it would prejudice commercial interests.
And it says it is unable to say how much the loan has cost the taxpayer in total, including administration costs.
North East Fife MP Wendy Chamberlain is now calling for an explanation.
She said: “After submitting an FOI, is it clear this loan has not been repaid, with almost £350,000 remaining outstanding.
“The Scottish Government should now explain why they later allowed the loan to be guaranteed against the Lundin Links Hotel only, and disclose how much this situation has cost taxpayers, particularly given the fact the site is still in disarray.”
Ms Chamberlain now intends to ask Fife Council what its costs were in relation to boarding up and then demolishing the former hotel.
Scottish Government response in full
Claire Middlebrook, of liquidator Middlebrooks, confirmed the shortfall in the repayment was due to the site’s sale price.
She said further repayments will be made if funds become available.
The Courier contacted the Scottish Government for comment.
And a spokesperson said: “The SME Housebuilder Liquidity Loan fund supported small and medium-sized housebuilders with liquidity issues due to the temporary impact of Covid-19 on the housebuilding sector.
“It aimed to safeguard jobs and protect suppliers, support post-covid economic recovery and the continued supply of homes and retain the diversity of the housebuilding sector.”
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