The Scottish chief of Barratt Developments has called for action to boost housebuilding activity in Scotland, as he highlighted his concern over current rental policy for the private rented sector.
Douglas McLeod, regional managing director for the housebuilding giant north of the Border, said the industry stands ready to deliver a large component of the homes that the country needs.
But he said changes are required both to release more land for building and to ensure the private rented sector (PRS) is attractive to investors.
Mr McLeod’s comments came shortly after Fife Council became the fourth local authority in Scotland to declare a housing emergency because of “unprecedented pressure” on housing and homelessness services, following Argyll and Bute, Glasgow and Edinburgh. It followed cuts to the housing budget announced by the Scottish Government for the 2024/25 financial year in December.
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Speaking shortly before John Swinney succeeded Humza Yousaf as First Minister, Mr McLeod said: “There is a lot of talk about the housebuilding agenda. What we are not seeing is action. The new planning policy, NPF 4 (national planning framework 4) is not driving the release of land for development throughout Scotland. So, I think a change of agenda could help improve housebuilding and generate more activity.
“I think what is sometimes forgotten is that housebuilding is a major employer of people throughout the whole of Scotland. It is one of the main industries. It is not just building on site, it is the factories that produce the material as well, so we are a major employer.”
Asked why he believes there is an insufficient supply of new affordable homes coming through in Scotland, Mr McLeod said: “What I would say is that the difference between Scotland and England [is that] Scotland does not have any targets for private housebuilding whatsoever, whereas England does. The only target there is in Scotland is for affordable housing.
“As it stands at the moment, I would say approximately [at] every site we develop throughout Scotland, a minimum of 25% affordable homes are built there. So, if they could stimulate the private housebuilding, then it would help improve affordable housing and we can deliver 25%. I think the housebuilders are the major contributor to the supply of affordable housing, in partnership with housing associations and local councils.”
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Mr McLeod added: “I think changes that have been made to the regulations and the drivers for the affordable homes has made it more difficult, and as you know there has been a 26% cut in funding for affordable homes. That will impact the delivery of affordable homes.
“But we are looking at innovative ways. If we could get more land released, we could deliver affordable homes by different methods to what has been done in the past. The private rented sector for the market would be one.”
Barratt’s involvement in the PRS in Scotland is currently limited to one site in Edinburgh.
Developers previously expressed concern over emergency legislation brought in by Scottish ministers to cap in-tenancy rent increases during the cost of living crisis, claiming it had caused investors to steer clear of funding PRS schemes in Scotland. The temporary protections for tenants in Scotland ended on April 1, however the Scottish Government has published a new Housing Bill which may pave the way for further rent controls as part of a New Deal for Tenants.
Mr McLeod said: “Unfortunately, none of the investment houses or investors in PRS are prepared to come to Scotland at the moment because of the rent caps.”
Asked if he believes a change in First Minister will bring a change to policy with regard to rent controls, Mr McLeod said: “The industry has been lobbying very hard on it and I’m very hopeful that with a change of leadership that we could see more assistance given to provide homes for rent, whether it’s affordable rent or private rented sector. But it needs Scottish Government intervention to change their current policies.”
Responding to further questions from The Herald yesterday, he added: “No statement about changes to policy on the housebuilding sector has been made by the Scottish Government since John Swinney assumed the role of First Minister. There has also been no movement when it comes to the direction of rents in the private rental sector.
“Private landlords are currently removing properties from the rental market, which is reducing supply and driving up rental costs. However, it will be interesting to see what will happen in both these areas going forward.”
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Barratt launched an all-share takeover for rival firm Redrow earlier this year, which is now being examined by the competition watchdog. Redrow does not currently operate in Scotland, but Mr McLeod said that could change. He said: “It is early days, but it is obviously something, assuming the deal proceeds, that we would look at in the future, because the Redrow product is excellent. If I could introduce some of that to Scotland I’d be keen to do so.”
Mr McLeod’s comments came as he celebrates his 50th year with the company.
Reflecting on his career to date, he said: “I really enjoy it. I wouldn’t be here doing it if I didn’t get a lot of satisfaction and pleasure out of it. I’ve been through the ups and downs as we all have. But if I look at the highlights and achievements over the years, they far outweigh the difficult times that we have had to deal with, and still deal with.”
He said Barratt is the only major housebuilder that “truly covers the whole of Scotland”, noting that it is currently active in Inverness, Elgin, Aberdeen, Dundee, Perth, Glasgow, Edinburgh, Livingston, the Lothians, and Ayrshire. Mr McLeod said: “I think we have got all the main population areas covered. We are the largest housebuilder in Scotland.”
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