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New building report

Shortfall in home building ‘hits affordability and job creation’

Nicola Barclay HFS conf

Nicola Barclay: ‘new homes bring broader benefits’ (pic: Terry Murden)

A shortfall in newly-built homes is contributing to price rises and preventing 20,000 jobs being created in the industry, according to a new report.

It says slow growth is squeezing some people out of the market and is denying tax and other revenues to the Scottish government.

The industry built 20,000 homes last year, around 80% of pre-recession levels after a decade of under-performance.

Homes for Scotland, which produced the report, is calling for a return to pre-recession levels of 25,000 while a recent report for Crisis and the National Housing Federation suggested Scotland needed 26,000 new homes per year over the next 15 years.

Homes for Scotland says home builders still regard the planning system as a major constraint, hindering the availability of viable land.

“There is strong evidence that the system is slow and complex in terms of delivery, with sites of 20 homes or more in the UK taking at least four years from the granting of detailed planning permission to site completion.”

Green Belt protection has “seriously restricted housing numbers in very marketable locations”, having knock-on impacts on affordability, internal space standards and design.

The industry supports 80,000 jobs in Scotland and has the potential to create 20,000 more if completion levels could get back to pre-recession numbers, says the report.

Residential development also stokes public finances through Land & Buildings Transaction Tax, Corporation Tax, PAYE, landfill tax, business rates, VAT, Council Tax and section 75 agreements. Combining various sources, it is estimated that this provides over £570 million to government finances from Scotland.

The report, the Value of Residential Development, said the lack of new homes, especially in the main cities, has caused “significant affordability issues”, especially for younger people, and has increased “wealth inequalities”.

It has also created difficulties for older people, with a dearth of suitable quality housing for a rapidly increasing elderly population.

HFS chief executive Nicola Barclay said: “Building the homes that Scotland requires is crucial to our country’s wider social wellbeing and economic success.

We still aren’t building at the level required to meet housing need

– Nicola Barclay

“This report highlights the different measures which can be used to assess this value in areas which are often not recognised.

“These include the environment, the regeneration of areas of deprivation and training and apprenticeships.

“We still aren’t building at the level required to meet housing need and demand and to unlock the broader benefits this would offer.

“This is detrimental to our growing population in terms of affordability, market volatility and increasing intergenerational wealth inequality.”

John Boyle, director of research and strategy at Rettie & Co, who led the research team, said: “Many of the ‘softer’ impacts of development often go unnoticed.

“It is clear from the evidence that development has knock-on consequences for improving health, educational attainment and social opportunities for communities.”

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