Why Scotland's town centres are being hollowed out while urban sprawl consumes greenfield sites
Scotland’s town centres need the pulse of a resident population once again, but it’s often cheaper and easier to build homes on greenfield sites
From the historic streets of Linlithgow to the post-industrial landscape of Greenock –indeed, all over Scotland – one central truth in town centre policy has become increasingly clear. We know that more town centre living is central to the future. We clearly have the vision, and we have the policy framework, but still we battle the friction of reality.
Scotland’s towns policy context is, on paper, world-leading. National Planning Framework 4 has sent a clear signal. We must bring a halt to urban sprawl and prioritise our town centres.
We have an established policy context that cements ‘Town Centre First’ principles and the expansion of permitted development rights, and the legislative green light is flashing brightly.
Yet, as I walk through towns like Kirkcaldy and East Kilbride, and in some of Edinburgh’s suburbs, I continually see that the spades in the ground aren’t moving fast enough. Why? Because the barriers are not just bureaucratic; they are systemic and financial.
The tax problem
It’s currently a frustrating reality that developing on a pristine greenfield site is often cheaper and simpler than revitalising a town centre. We are fighting a taxation imbalance that makes no sense in a climate emergency, with a 20 per cent VAT burden on town centre redevelopments, while greenfield new-builds are often zero-rated.
When you add the often astronomical costs of upgrading older buildings to meet modern housing and energy standards, the ‘viability gap’ becomes a significant void.
Then there is the complex jigsaw of fragmented ownership. A single town centre block might have a dozen different owner-landlords, making a large-scale, cohesive development challenging or nearly impossible without strategic intervention.
To make town centre living a reality, we aren't just building flats, we are building ecosystems. A home in a town centre only works if there is a primary school nearby, along with accessible GP services, high-quality green spaces, and a vibrant retail offer. We aren't just looking for new housing units; we are looking for places where lives can be lived to the full.
Solution must be radical
For me, the solution lies in radical collaboration. We need early, meaningful engagement between the Scottish Government, local government, the private sector, and investment partners. Far too often, rigid procurement processes stifle the very conversations needed to assess feasibility and mitigate risk.
We need to move away from the complexity of the current funding landscape towards multi-year models that provide the long-term certainty craved by funders, developers and councils.
This is why I am so heartened by the First Minister’s recent announcement of the More Homes Scotland agency. At Scotland's Towns Partnership, and through our work with the Scottish Futures Trust, we have long advocated for a national delivery body that recognises town centre living as a national priority.
This new agency could hold the key to unlocking the stalemate and helping turn town centre blueprints into much needed homes in a national housing crisis.
Of course, planning reform and national targets are critical, but we are at a national and local crossroads. We have the maps and have expressed the national will – now we need the investment mechanisms.
Scotland’s town centres are the heart of our communities – it’s high time we gave them the pulse of a resident population once again.
Kimberley Guthrie is chief officer of Scotland’s Towns Partnership
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