Home Truths - The Future of Housing in Scotland
Wednesday, December 19, 2007
by
Murray Shaw
It is nearly 6 months since the change of Government in Scotland occurred. While there has been considerable publicity and comment about certain significant issues such as the tensions in the relationship between the Scottish Government (or Scottish Executive) and their counterparts down south, the Scottish Government have not let these issues stop them from pressing ahead in implementing a number of their manifesto objectives.
In that context, at the end of October, a Green Paper/discussion document was produced which may yet have very significant effects within Scotland. This discussion document is entitled “Firm Foundations: The Future of Housing in Scotland”. While at first blush it might only be thought to be relevant to those in the development industry it addresses a number of key issues which have the potential to significantly impact upon Scotland in both an economic and social sense.
A key issue addressed by the discussion paper is the significant house price growth which has taken place in Scotland over the past few years. This has already been the subject of reports in England where Kate Barker a well known economist produced a report at the behest of the Treasury. This identified the need for a marked increased in the number of houses built in England to help control house price inflation. The report resulted in headlines suggesting that the whole of the southeast will be “concreted over”.
In the same context, the discussion paper is advocating an increase in new private house numbers from 25,000 to 35,000 units a year at least in part to address the pressure on house prices. According to the discussion paper, this will result in a “per capita rate of building far ahead of that for which the UK Government is aiming in England”. That comment is made in the context that the prices of houses in Scotland in general are 72% higher than they were just 4 years ago while new build levels have remained fairly static for 10 years. Perhaps not surprisingly, the Scottish Government sees this target of 35,000 units a year as a challenging one not just for local authorities but for the private sector, though in fact represents the sort of scale of development that the private sector has been calling out for for some significant time.
The target however, is not simply to deal with the issue of house prices. It is intended to help increase the choice of houses available. A key aim of the discussion paper is to try and provide for all families in Scotland “ a decent house that we can afford in a place where we want to live”. That aim in itself raises other significant issues.
The issue of affordability is a significant one. Despite the growing disparity between income and house prices, there has been a significant increase in house ownership in Scotland. In 1982, just over 40% of the housing stock was owner occupied. That figure had increased to 67% by the end of 2005. While there is a similar pattern throughout Europe, the rate of increase in Scotland has been higher than many other countries. To some extent, increase has been the result of Council house sales which has also resulted in issues of affordability and availability for lower income families and certain groups including key workers. The Scottish Government are therefore proposing that the right to buy should be taken away in relation to new houses built by Councils or indeed Housing Associations.
The discussion paper recognises that the issue of affordability has to be addressed in a number of ways. In particular, it is recognised that first time buyers are critical to the operation of the housing market and they need to be given assistance. It has been announced that there is an intention to set up a Scottish Housing Support Fund. The discussion paper announces a new initiative known as LIFT which is intended to help first time purchasers get on the “housing ladder”. It notes that at least part of the problem results from the fact that there is lack of genuinely affordable, first time entry level or starter homes. The challenge that the Government sets for local authorities and the development industry is to consider how the range can be increased “without public subsidy”. It is unlikely that the Government will go forward with the initiatives indicated in the discussion paper unless solutions for this problem are identified. That again may be quite a challenge. A number of developers claim to have such a product but have been unable to bring it to the market for a variety of reasons.
Interestingly, the discussion papers sees (notwithstanding the other aspirations set out) a significant role for the private rented sector. Comment is made that this sector plays a smaller role in the Scottish housing market than in comparison to many European countries. Clearly, the Scottish Government thinks that rented housing provides a flexibility in the market and according to the discussion paper they want to set an “agenda to allow that sector to flourish” in itself. Part of the difficulty in this is of course the fact that many members of the public now see house ownership as a means of increasing wealth. This route must be questioned against the background of the way in which the housing market has operated over the last 10 or so years as to whether in fact it is possible to grow further the rented sector.
The aspiration is to provide not just affordable homes but homes where people want to live. That in itself raises many questions and issues. Part of the difficulty from the developers perspective in the past few years has been securing planning permission to develop houses in what they consider to be appropriate areas. The suggestion in the discussion paper is that local authorities may need to come together to plan for the increased target of 35,000 houses a year by co-operating on a regional basis. That level of co-operation is not always apparent in Scotland where local interests and requirements often dictate the agenda and approach adopted by local authorities.
The Scottish Government have made clear that this increase in numbers is not to be at the expense of quality, environmental or sustainability standards. One possible solution proposed is the creation of new communities. These again have a chequered history in Scotland and often have a long lead in time. They also often raise disproportionate amounts of objection –comments similar to those which have been made in England about concreting over the green belt may yet be heard in Scotland. There is however a potential solution which many developers will be keen to pursue. The emphasis on quality and design is interesting and certainly reflects a common criticism made by planners in both Local and Central Government to the effect that the quality of many new housing developments is poor. That is not a criticism that developers lightly accept but it is clearly an issue that is not going to be lost sight of in taking forward these proposals.
There are issues which are not addressed. Notably, nothing is said about resolving infrastructure problems - often the single greatest impediment to development. It will be interesting to see how the Scottish Government approaches this problem in light of the demise of the Planning Gain Supplement.
All in all, the discussion document is an interesting one and worthy of reading whether or not you are directly involved in the development industry. There are clearly challenges for all those who are involved in that industry. However the impact and effect of these proposals goes far beyond just the development industry. Whether or not the Scottish Government will be able to proceed is an entirely different matter. At least part of the difficulty is that the housing market is subject to forces both at national and international level which the Scottish Government have no control over – the current “sub prime” lending crisis being a good example of that.
The record of the Scottish Government to date suggests they will not delay in seeking to implement policies which they consider important. This discussion document clearly deals with issues which are significant and important to Scotland and the way in which these issues are taken forward may have significant consequences for us all, not least given the importance of property to the economy as a whole and property values to personal wealth.
The information contained in this article is given for general information only and does not constitute legal advice on any specific matter.