What does Scotland’s budget mean for housebuilders?

December 16, 2016 / Isla MacFarlane
What does Scotland’s budget mean for housebuilders?

The Scottish government reiterated ambitious plans for housing in its draft budget, with a commitment of over £3 billion to deliver 50,000 affordable homes over the five years.

Government investment in housing, in partnership with councils, housing associations and developers, will, on average, leverage economic activity in the region of £1.7 billion per year, supporting around 14,000 jobs in the construction and related industries in Scotland.

However, industry commentators are cynical over the government’s ability to follow through. “The Scottish Government recognises the need to increase the delivery of new homes for the benefit of Scotland’s communities and economic growth but there is little in today’s statement to make this happen,” said Homes for Scotland Chief Executive Nicola Barclay.

“Whilst there is generous capital spend on the delivery of affordable homes, which is welcomed, our members tell us that it is harder than ever to commence new sites and get much needed homes of all tenures out of the ground,” she added.

In particular, the industry was disappointed that none of the £800m of capital budget consequentials from the Autumn Statement will be used to unlock development in Scotland, especially in relation to the provision of education infrastructure which is now one of the biggest blockers to housing delivery.

“We had requested the Scottish Government extend the five per cent banding of the Land & Buildings Transaction Tax given the impact this is having on house purchases above the current £325k ceiling,” Barclay said. “Whilst we fully support the Scottish government’s aim of helping First Time Buyers, we must ensure that the property ladder functions at all levels. When aspirational buyers choose not to move, this prevents others further down the ladder from being able to do so.

The proposal to ‘modernise compulsory purchase orders to ensure vacant and derelict land can be brought into use for communities’ received a warmer reception. “It is right that positive opportunities to intervene are fully explored for sites where landowners would struggle to bring development forward without support,” said Barclay. “This echoes Homes for Scotland’s views on the need to prioritise positive interventions over financial penalties which would be unlikely to help unviable sites.

“We also look forward to seeing the detail of the SME Holding Fund as we recognize that the SME sector of the housing industry has been disproportionately impacted by the downturn and requires support if it is going to grow and help deliver the many thousands of homes this country needs.”

The Draft Budget 2017-18 also made available over £100 million for the Home Energy Efficiency Programmes for Scotland (HEEPS), to help improve the condition of Scotland’s homes as part of its commitment to make half a billion pounds available to support Scotland’s Energy Efficiency Programme (SEEP) over the next four years.

“The Scottish Government is right to recognise the importance of investing in our existing housing stock,” said Gordon Nelson, Director of FMB Scotland. “Scottish homes are amongst the oldest and least energy-efficient in Europe. They are in urgent need of upgrading.

“The latest figures show that 748,000 Scottish households are fuel poor, and over a quarter of our country’s CO2 emissions come from residential buildings. This underlines how important it is to bring our existing homes up to scratch. Added to this, there is a much wider range of benefits, to health, job creation and economic growth, which will follow from this investment. Given that only a few months ago, Theresa May scrapped the Department for Energy and Climate Change, leaving Westminster without strong advocates for energy efficiency investment, it is fair to say that Scotland is now leading the UK on this issue.

“When seen alongside the firm commitment to invest in infrastructure and a desire to focus on house building, it is clear that the Finance Minister is under no illusions about the economic challenges the country faces. We hope that the announcements made today mark the start of a serious programme of investment, so that Scotland can build the world class homes and infrastructure it needs in these uncertain times.”

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