Tackling the disconnect between Scotland’s housing shortage and newbuild supply

While the impact will largely be seen south of the border, the new Labour Government has promised to ‘get Britain building again’ to ensure the delivery of 1.5 million new homes in England over the next five years. Mandatory targets are set to be reintroduced, alongside significant changes in planning, and with many housebuilding firms operating on a national scale, this could also be a welcome boost for housing availability in Scotland.

Scotland remains in the throes of a housing emergency, with one in four of our 32 local authorities reporting extreme pressures on housing associations, homelessness services and temporary housing. Yet, despite the shortage of suitable accommodation highlighted as a major concern, the number of new affordable housing building projects is at its lowest for 35 years.

There is a drastic need for more new homes to be built. While Glasgow, Edinburgh, Argyll and Bute, Fife, West Dunbartonshire, West Lothian, and the Scottish Borders are the areas already calling it an emergency, the picture is similar all over Scotland. Recent figures showed that in 2023-24, there were 3,000 fewer new home starts compared to the previous financial year and overall completions fell by 17%.

We need to start looking at the reasons why housebuilding in Scotland has plummeted and what could be done to help resolve the situation, to try and help the people in need of a roof over their heads.

One positive step north of the border has been the introduction of the Housing Bill (Scotland), designed to reform the private and social rental sector. However, the fundamental need for more housing seems somewhat overlooked by the legislation – a key piece of the puzzle.

At the same time, the market dynamics for developers, especially SME housebuilders, for whom the number of new homes sold has fallen by half since 2017, could not be more challenging. Over the last few years, pressures have mounted from Brexit, the pandemic, interest rates, inflation, and supply chain problems. Sadly, for businesses such as Stewart Milne Group and Merchant Homes, there was no way out. There are several factors at play, and potential fixes that could help to improve the flow of new housing stock.

A rethink of the planning process is already on the agenda. Recently, applications have been taking up to three times longer than the statutory period of 16 weeks, which is only adding to the reasons for low build figures. Proposals to increase fees and thereby boost capacity and resources in planning departments are just one of the measures being considered – assuming the extra income will be used to improve the planning system. Without some kind of change, delays are only set to continue.

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