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The Scottish housing crisis - time for change

The Scottish housing market is rapidly approaching crisis point. With Homes for Scotland indicating that less than half of the Government’s annual target of 35,000 homes are being built, what does this mean for Scotland’s growing population? And more importantly, what’s the solution?

Graham Hill

Cities Executive for Scotland Ask me a question

Hosted by Arcadis, a select panel of experts from across the public and private sector came together last week to discuss just this. 

Led by Graham Hill, Cities Director for Scotland at Arcadis, industry leaders including Tricia Hill, Scottish Development Director for Places for People; Jim MacDonald, Chief Executive of Architecture and Design Scotland; Nicola Barclay, Chief Executive of Homes for Scotland; and Michael Thain, Strategic Housing Manager for City of Edinburgh Council, hotly debated some of the issues holding back housing delivery. 

How big is the problem? 

Graham set the stage by outlining some startling figures; Scottish housing production has declined 40% since 2007, and there are currently 160,000 people on housing waiting lists. The population is forecast to grow by a further 10% by 2035 which, combined with an aging population and 44%  growth in single occupancy dwellings, is putting further pressure on an already strained system. 

The problem doesn’t end there. As Nicola pointed out, the scale of the crisis is actually increasing. For the year to date, Scotland has built 2% fewer homes than during the corresponding period last year. While there is unfortunately no quick fix, the panel agreed that the country simply can’t afford to be going backwards on its target. 

Exploring solutions 

One solution is to increase lending and look at measures to stimulate investment. Nicola made it clear that, while it’s paramount that people should have access to mortgages, the government also has a responsibility to ensure that land is available to build on. 

Jim MacDonald agreed, pointing towards the lack of available space as a major impediment to increasing supply. Jim stressed that we need to consider a trade-off between meeting housing targets, and protecting green-belt areas. Sometimes building on green-belt land is a necessity, but we also need to consider what we want Scotland to look like in 50 years’ time. This could mean, for example, building on both greenfield and brownfield sites as a potential means of unlocking development. 

The power of place-making 

Ultimately however, place-making needs to take precedence. Jim stressed the danger of focusing purely on numbers, pointing out that we need to build the right number of homes for the people that need them, not simply set targets for the sake of it. 

Tricia Hill also focused on the need for associated services such as schools and medical practices to be delivered in conjunction with new homes. It was broadly bemoaned that Section 75 can result in a long, drawn-out consent process, further increasing the time it takes to get important community services in place. Tricia went on to argue that everyone has a responsibility to accept that new sites demand services. She called for a mutual requirement to fund services through, for example, local authority tax revenue. With this in mind, local authorities need to assess if they can fund services at the proposal stage, rather than waiting until the need is more pressing. 

Public versus private sector delivery 

Michael Thain focused on one of the most pressing issues of affordability. Graham had already pointed out that average house prices in Scotland are more than five times the national salary. However for Michael the paradox is that, although private sector development is unaffordable, we still need to see growth in this area in order to experience a simultaneous boost from the requirement for all private housing to have a 25 percent affordable allocation.

More generally, for a home to be classed as affordable house prices need to drop to three and a half times the national salary. Michael went on to call for a complete change in the financial model, with grants, mixed tenure type and new equity models all essential if we are going to offer affordability to all.

The City Deal certainly has a role to play, both in terms of increasing funding for traditional affordable housing, and in seeking to prompt negotiation with central government. Key to this will be giving local authorities the power to create Housing Trusts, which can then build affordable homes both for sale and rent.  

The public sector also needs to look at the business case for keeping hold of land, utilising it in joint ventures or using other collaborative approaches with the private sector.

Nicola agreed that collaboration between the private and social rented sector was essential. This is already happening through, for example, the sharing of contractors, but Nicola also went on to ask the question that perhaps PRS should be included as an affordable option. 

Learning from others

Clearly there is no one, single solution. The City Deal does, however, offer some hope. Nicola cited the example of Dundee, which has changed almost unrecognisably in the last 20 years thanks to vast government investment. This proves how much can be achieved where there is the will and desire for change. 

Tricia went on to discuss how much can be learnt from the Private Finance Partnership model, pointing to a Places for People development in Leith where homes were rented for five years before being sold.  

Looking to the future 

As the debate drew to a close, Graham highlighted the key word used by all of the panellists: collaboration.

The housing crisis is a vast national problem, and the solutions are both multi-faceted and complex. What we need is a concerted effort from central government, regional councils, housebuilders and organisations such as Homes for Scotland to deliver an equitable and balanced housing sector for the mutual benefit of all.  

We are undeniably faced with a challenging set of circumstances in attempting to broaden the tenure mix, as well as increase housing stock and improve affordability. However, we need to be careful not to repeat the mistakes of past generations. Good place making is integral for creating the sustainable communities of tomorrow.  

Questions about this article

Graham Hill

Cities Executive for Scotland Ask me a question

Arcadis White paper

The Scottish Housing Crisis