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What ails Scottish housebuilding?

Scot-Buzz editor Bill Jamieson has some suggestions for a cure...

Scotland has every reason to be a housebuilding leader – and the industry a leader in economic upturn and recovery. But instead the industry is mired in problems, from cash constraints through planning hold-ups to ever rising regulation.

The result? Instead of a building resurgence we have glacial growth. Instead of more “affordable homes” we are legislating for ever more expensive ones. Instead of greater creativity, innovation and imagination in design, there is a retreat into the same and the lookalike.

Latest Scottish government figures testify to the moribund state of the industry.

Eight years ago annual housing completions in Scotland were running at almost 26,000. But for the year to end September 2012, that figure had slumped to 15,046 – a 41 per cent slide.

Output is at its lowest level since 1947 and there are record insolvencies in the construction sector.

A recovery (of sorts) has set in. But it is glacial and fitful.  The number of starts rose 11 per cent in the year to end September, though this reflects the notably low level of starts in the weather blighted fourth quarter of 2010. Scottish government figures for the latest quarter (2012 Q3) show the number of starts fell back by 10 per cent compared with the same period a year previously.

160,000 on waiting lists

Given the long waiting lists and the inability of young people to afford the first step on the housing ladder, council house building is woeful. Just 958 new council houses were started in 2012 and 1,096 completed. But there are 160,000 young people on waiting lists.

Councils are strapped for cash. Mortgage lending, while showing modest month-by-month recovery, is far below the levels of five years ago. There is resistance in many areas to new housing development. And many builders are deterred by the extra requirements and impositions being imposed by local authorities.

Regulatory barriers are not being lowered. They are being raised. Last week major trade bodies representing the home building, commercial property and construction sectors voiced their collective concern over Scottish government proposals to impose additional regulatory burdens.

These threaten to place Scotland at significant economic disadvantage in comparison to England and intensify the housing shortage.

Up to £10,000 added to building costs

Homes for Scotland, the Scottish Property Federation, Scottish Building Federation and Federation of Master Builders say more red tape and increased costs will make Scotland a more  expensive and difficult country in which to invest and build.

The joint letter to Scottish government ministers points to the recent consultation on energy standards, with the Scottish Government’s own figures showing that proposed changes  could add up to £10,000 on to the cost of building what are already highly energy efficient new homes.

Further demands on energy efficiency are also being made on new offices when they have already reduced their carbon emissions by 70 per cent compared to 1990.

The letter warns that any moves to further increase regulation will have significant impact, “not only in terms of the delivery of much needed new homes and jobs but also the wider range of policy areas which home building and the construction industry more generally supports.”

Enter a new “expert group”

As for opening up new avenues of finance by tapping pension funds, the administration has been “on the case” for two years – but with little effect.  Only this week Deputy First Minister Nicola Sturgeon has announced an “expert group” to look at ways to attract additional finance to increase housing investment targeting pension funds and other institutions.

The group “will also identify and address any barriers to attracting this source of investment.  This will involve engaging with house builders, investors and potential landlords to discuss ways to enable the delivery of rented accommodation across Scotland.”

The initiative is welcome, particularly when the number of new homes needed by 2035 is estimated at 465,000.

But why only now?

The picture is by no means totally bleak. Scots builders are capable of successful, innovative and imaginative new ventures, across both the public and private sectors.

The annual Homes for Scotland industry awards, due to be held on Friday May 17 celebrates many examples of excellence in Scottish housebuilding.  A total of 87 submissions were received, up 10 per cent on the previous year and the highest total since the awards began in 2003.

Scotland does not lack outstanding exemplars in house building today, whether in energy efficiency, design, innovative use of materials and integration with the local environment.

What drives this industry forward – and what has historically always driven it forward - is its ability to create, innovate, adapt and inspire,  to lift our aspirations for better designed, more attractive, more energy efficient, environmentally pleasing, lifestyle suited  and desirable places in which to live.

So here are my four suggestions to boost recovery:

  • Scotland should adopt the example down south of scrapping two existing regulations for every new one introduced.
  • Legislation on energy efficiency should recognise the huge improvements already achieved and not blight the good in pursuit of the best.
  • Councils should offer planning fee discounts and incentives for imaginative design and appearance.
  • Engage the banks in consultations on new funding schemes and approaches and encourage venture capital involvement.