Planning call

‘Alarming’ fall in SME housebuilding ‘will hit targets’

Jane Wood
Jane Wood: challenges (pic: Terry Murden / DB Media Services)

A trade body is calling for urgent planning reform after new data revealed an “alarming reduction” in activity among smaller house builders in Scotland.

A report by Homes for Scotland says current trends and challenges will make it more difficult for Scotland to achieve its targets.

The research reveals a 45% surge in company dissolutions last year compared to pre-pandemic 2019. The proportion of homes sold by firms building fewer than 49 per year fell to 20% last year from about 40% in 2017.

The report showed that the dissolved companies are typically under five years of age, with headquarters mainly in core urban centres as well as in North and South Lanarkshire.

It has been published at a time when the country in the grip of a national housing emergency and 28% of Scottish households (693,000) are in some form of housing need.

HFS chief executive Jane Wood said: “Given the vital role which SME home builders have to play in Scotland’s housing ecosystem, it shows alarming reductions in terms of market share and the number of companies which have been dissolved.

“This clearly has capacity implications for the delivery of much-needed new homes of all tenures.

“Our research found that SME home builders are key to unlocking the brownfield sites which the Scottish Government has said it wants to prioritise. Our data also reveals their importance in delivering housing in rural and remote areas.

“SME home builders have particular challenges in relation to the viability of their operations, not least in relation to economies of scale, ever increasing regulation and the upfront costs associated with residential development.

“Above all, however, the planning and consenting systems are having a hugely detrimental impact, especially in relation to the speed of processing and resourcing. This is a hugely frustrating state of affairs.”

HFS has proposed a number recommendations for national and local governments to act upon to support the SME home building sector, including:
▪ an urgent cross-portfolio review to identify, consider and remove SME burdens and challenges
▪ proportionate planning practices that actively support SMEs
▪ new innovative funding streams and partnerships to remediate and unlock sites
▪ the implementation of an SME home builder impact assessment relating to policy proposals and changes
▪ the creation of a focused delivery vehicle to unlock more small sites

Ms Wood continued: “This report shows that before the financial crisis, SMEs were delivering 3,000 more new homes each year than they are now. A return to this level could support an additional 13,200 jobs.

“The social and economic imperatives are clear to see. If parties and politicians of all persuasions and local authorities are genuinely serious about addressing the housing emergency, they must now act to introduce the reform that is required to improve to support home building.

“HFS and its members are absolutely committed to working with them to achieve this.”

Hugh Fairbrother, Strategic Development Business Manager at Scottish Water, which partnered with HFS on the research, said: “SME home builders are a diverse and dynamic sector, contributing to the economic and social wellbeing of communities across Scotland.

“They face many challenges and opportunities in the current operating environment. The insights gathered by this research will help Scottish Water innovate and collaborate with the industry, support the transition to a net zero economy and help SMEs to unlock their potential to deliver more and better homes across all tenures for Scotland.”

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