Much is being made of today’s decision by the Scottish Government to declare a national housing emergency, but speeches and fine words are easy and cannot be converted into bricks and mortar. What we need is action.
For too long now, ministers at Holyrood have been choking off the supply of new homes, not just by taking baffling funding decisions such as cutting the affordable housing budget, but by creating huge industry uncertainty by embracing policies such as rent controls.
The day before the Bute House Agreement collapsed, housing minister Paul McLennan attended the Scottish Property Federation conference and was told in no uncertain terms that he and his colleagues are approaching the problem in the wrong way.
Through legislation like the recently published Housing (Scotland) Bill, which proposes the introduction of long term rent controls, ministers are tinkering with the demand end of housing and totally ignoring the issue of supply.
On one hand, the reason for this focus on making life as secure as possible for tenants is understandable. Over the past 20 years, the proportion of households in the private rented sector has increased and now stands at between 12 and 15% of the total.
But ministers must realise that by creating so much uncertainty over the future of the rental market, they are contributing to the housing crisis by deterring institutional investors who have hundreds of millions of pounds to spend on build-to-rent developments across Europe.
These people do not mind where they spend their money, as long as they can be sure of a return on their investment. At the moment, cities like Berlin or Copenhagen are far more attractive than Glasgow and Edinburgh, purely because of the level of political uncertainty here.
Even before the Greens were removed from government by Humza Yousaf, it was already becoming clear that the Housing (Scotland) Bill was heading for the rocks. I expect it will be kicked down the road by John Swinney, substantially watered down and may not even be enacted before the next Holyrood election in 2026.
Unfortunately, there are other systemic problems too. Cuts to council budgets over many years have had a knock-on effect on planning departments, meaning that it is taking longer for permission for housing developments to be granted.
From the private sector’s perspective, long delays to planning permission translates into extra costs, which again deters investment. Why waste money going through this laborious process with a Scottish local authority if you can get a quicker turnaround somewhere else?
Our new First Minister has stressed that his focus will be on the Scottish economy. Good: he should start by dramatically increasing the housing budget, removing unnecessary red tape and kickstarting the construction of new homes.
Research by the Confederation of British Industry has shown that for every £100,000 spent on construction in the UK, £290,000 is added to our GDP. Building houses creates jobs in construction and the wider supply chain, raises average salaries and will ultimately help with rental costs by dealing with the lack of supply.
Swinney should also make it easier for housing associations, which are responsible for the nation’s social housing stock, to borrow money. Currently, they are governed with an iron rod by the Scottish Housing Regulator, a system which makes these already conservative bodies even more ginger in their decision making.
Declaring a housing emergency is not enough. We must build our way out of this crisis, and it is time for our leaders to put their money where their mouth is.
Brian Gilmour has almost 30 years of experience in the Scottish property industry and currently runs Indigo Square, a residential lettings and block management firm with branches in Glasgow and Ayrshire. He is a co-host of the Scottish Housing Podcast.
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