Investment threat

Holyrood ‘must follow Labour’ or put housing at risk

Investment may head south unless there are changes in Scotland says an expert (pic: Terry Murden)

Scotland is at risk of losing more investment in the construction and housing industries to England unless the Holyrood government aligns with Labour’s plans to reform planning rules, says a sector specialist.

Ministers are being urged to follow new Chancellor Rachel Reeves’ commitment to cut red tape that will unlock plans for 1.5 million homes to be built in England.

The proposal has received widespread attention as a centrepiece of the new Westminster government’s ambitions for kickstarting sluggish growth.

However, housing and planning are devolved matters and the Scottish Government is now coming under increasing pressure to revise its own strategy which has been criticised for a failure to hit targets and for Scottish councils taking longer than the UK average to approve planning applications.

Claire Monaghan, partner and head of real estate and construction in Scotland at audit and tax firm RSM UK, said the Chancellor’s statement in the Treasury yesterday sends a “clear message” that Labour is committed to stimulating the housing market.

“Planning is however a devolved matter in Scotland,” said Ms Monaghan. “While the SNP manifesto includes key pledges on infrastructure investment, a focus on housing appears to be missing despite there being a widely recognised housing crisis.”

She noted that this is forcing people to stay in rental accommodation for longer and that the new Housing (Scotland) Bill includes proposals for long-term rent controls “which makes investment in the sector less attractive.”

She added: “We repeatedly hear of the challenges faced by developers and planning reform is critical to resolving the housing crisis.

“While it will take time for the Chancellor’s targets to be delivered in the UK, there is a risk that Scotland falls notably behind without similar targets and loosening of planning rules.

“The construction sector has had a tumultuous few years and it is likely without change in Scotland we will see a shift in investment focus to England as developers will have less red tape to navigate and will be able to see much needed returns. This is a divide the Scottish economy cannot afford.” 

Her comments followed a similar plea from Homes for Scotland chief executive Jane Wood who said: “It is very encouraging to see the new UK government placing a major emphasis on housing delivery and the planning system, with the new Chancellor making announcements on these within 72 hours. 

Jane Wood
Jane Wood: We can reverse the decline (pic: Terry Murden)

“But with both of these matters devolved, will the Scottish Government listen to those who are saying unequivocally “it’s not working for us” and recalibrate to change the alarming downwards trajectory on housing numbers? 

“Will it bravely acknowledge that the root causes lie not only in UK capital budgets but in an underinvestment in our planning regime and a regulatory environment that fails to recognise the unintended consequences of policies created with poor understanding of the costs, the impacts on consumers and, critically, on those organisations, both private and public who build the much-needed homes of all tenures that we require?”

She said the latest figures show significant falls in both starts and completions at 15% and 17% respectively.

“We can reverse the year-on-year decline in housing numbers and address the shortfall of more than 100,000 homes that has accumulated since 2008,” she said.

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