The barriers to progress in tackling Scotland's housing emergency

There is undoubtedly a pressing need for what the government describes as the “enhanced and accelerated” actions to tackle the housing crisis, in particular the “new all-tenure delivery ambition,” which seeks to work with the housebuilding sector to boost delivery across all sectors by at least ten per cent each year over the next three years.

But it is an uphill task which requires complex and interrelated problems to be overcome. Here are some of the key barriers to progress.

Falling completions and starts

Four years have passed since the government, then under the leadership of Nicola Sturgeon, set a target of delivering 110,000 affordable homes - 70 per cent of which will be social rent - by 2032. As of March this year, only 28,537 properties had been completed towards that target.

The latest national housing statistics show that work started on 15,053 new build properties in 2024/25. Not only is that 11 per cent down on the previous financial year, it marked the lowest level of starts since 2012/13 for both new private and new social sector houses, with the exception of 2020/21, when the pandemic wrought widespread disruption across the sector. The number of private new build completions - some 14,798 - is at its lowest level since 2017/18, with the 4,490 social sector completions at a low not seen since 2016/17.

The numbers fall further when it comes to affordable housing. In 2024/25, there were 4,775 approvals, 5,424 starts, and 7,444 completions of affordable homes funded by the Scottish Government’s affordable housing supply programme. All the figures were sharply down year on year, with the number of starts at their lowest level since 2011/12.

Affordable housing shortfall

The government’s emergency action plan acknowledges that delivering affordable homes remains the “beating heart” of its approach, and says the new goals will build on its “strong track record.” But with a downward trend in starts and completions of such properties, it is facing an uphill task.

Indeed, despite the £4.9bn funding package announced by Ms McAllan, a new report commissioned by the Chartered Institute of Housing Scotland (CIH Scotland), Shelter Scotland, and the Scottish Federation of Housing Associations argues that some £8.2bn is needed over the next five years to build the 78,465 social and affordable homes Scotland needs by 2031.

The government is targeting the delivery of 10,000 affordable homes per year, but the research, produced by academics from the the University of Sheffield, the University of Liverpool, and Sheffield Hallam University, indicated that the annual gross affordable housing requirement is actually 15,693 homes, necessitating “urgent, significant and sustained investment.”

“£4.9bn is a welcome demonstration of intent, but it fails to meet Scotland's social and affordable housing need and resolve the housing emergency,” said Callum Chomczuk, CIH Scotland’s national director.

Barbara Welsh, chair of Living Rent, said the ongoing failure to ensure everyone has a roof over their hearts will only deepen inequality and fuel tensions. “Fundamentally, we need more homes, but crucially, we need more genuinely affordable homes,” she said. “With nearly 250,000 people on social housing waiting lists, this government has its head in the sand when it comes to the housing emergency.”

Planning problems

Several figures in the sector told Scotland on Sunday that planning and consents were among the most frustrating barriers to the delivery of new build properties.

An executive at one housebuilding firm, who did not wish to be named, said they had lost out on private investment for a new housing development because of the “absurd” length of time the scheme was caught up in the local authority planning processes, with a wait of more than a year before approval was finally granted.

“I don’t blame the planning officials or the councillors, it’s not their fault,” they explained. “But there’s simply not enough people in the department to deal with the volume of applications. It’s not remotely fit for purpose and it’s having a huge effect on the local economy.”

That issue, according to the government’s own data, appears to be a nationwide trend. The average decision times for major housing development applications without processing agreements stood at nearly 60 weeks in 2023/24. That is higher than any year in the government’s records, including those impacted by the pandemic. On top of that, just 77 major housing developments were determined in 2023/24, part of a downturn that has been ongoing since 2019/20.

Faisal Choudhry, head of residential research in Scotland for Savills, said Scotland’s National Planning Framework 4 (NPF4) was the “main pinch point” when it comes to housing supply, and said the policy “often feels at odds with the declared national housing crisis.”

For its part, the government has said it will closely monitor, through a ministerial direction, the implementation of national planning policy on housing, where an application is for 10 or more proposed new homes on land not allocated for housing. It also intends to issue a ministerial letter to planning authorities highlighting the role planned by SME housebuilders, and emphasising the need for “proportionality” in the system to enable delivery.

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Regulatory wrangles

Added to the planning concerns, many in the industry are increasingly concerned at the volume and impact of regulatory changes, which they say do little to improve inward investment, and risk jeopardising much needed new developments.

One firm calculated that the regulations that have been introduced, or are being consulted on, during the current Holyrood parliamentary session would add at least £34,000 to the cost of a new home, a bill they deemed “unsustainable” for SME companies.

A particular source of contention is the proposed new building safety levy, which ministers say could raise up to £30 million a year to help finance work to fix residential buildings with unsafe cladding. Housebuilders, however, say it is inequitable that they are having to pay for such work on developments they had no involvement in, and warn that the levy could impede new building in rural and disadvantaged areas.

Jane Wood, chief executive of Homes for Scotland, welcomed the government’s “vital commitment” to increase building, and said future policy and regulation “must boost new housing delivery rather than hinder it.”

Funding ambiguity

As with any major government action plan, the allocation of funding for new house building, and how it is delivered, is integral to its success, and some have questioned the figure - or lack of them - underpinning Ms McAllan’s announcement.

The sector is wrestling with increasing construction and labour costs, and while house prices have increased by around four per cent over the past three years, build costs are up by 14 per cent over the same period, according to the BCIS All-in Tender Price Index.

Alison Watson, the director of Shelter Scotland, said the “devil will be in the detail,” of the government plan, and stressed there was no confirmation of new money to build the extra homes needed, no clarification about whether the new money for buying homes is “new money” or funds previously earmarked for new builds, and “no mention” as to whether the government remained committed to its 2032 affordable homes target.

Others, such as Duncan Maclennan, emeritus professor in urban economics at the University of Glasgow, echoed the calls for a major uplift in affordable housing funding, and said the issue of housing finance had to be considered alongside wider economic factors.

He told Scotland on Sunday there was currently “no link” to economic strategy and called for an “urgent rethink” on the taxation of housing, which went beyond the age-old debate around council tax. Mr Maclennan said non-profits should be at the centre of change in the sector, and stressed the need for “root and branch rethinking of how to govern Scottish housing.”

Buyer pressures

Mr Choudhry said that while the former Help to Buy scheme supported people trying to get on the housing ladder, with a cap on property values of £200,000, not enough has been done to offer assistance since the initiative was wound up.

“There is no similar scheme in place to support first time buyers looking to purchase a private for sale new build home,” he reasoned. “An easing in mortgage rates has supported the sales rate of new homes, but house builders are having to offer a wide range of incentives to enable sales to progress.”

He added: “That said, the Deposit Unlock is a brand-new scheme devised in collaboration with lenders and the home building industry. It enables first time buyers and existing homeowners to purchase a new-build home with a 5 per cent deposit.”

Ms Welsh said the proliferation of build to rent developments effectively “trapped” tenants with high rent costs, preventing them from being able to save for a deposit.

Regional pressures

NPF4 includes what is known as a minimum all tenure housing land requirement (MATHLR) for each planning authority, which specifies the minimum amount of land that is to be provided for houses over a 10-year period from February 2023..

An annex to the document makes clear where the need is the greatest, with Edinburgh requiring 36,750 new homes over the decade, followed by Glasgow (21,350). The spate of recently approved developments in capital, such as the West Town scheme, one of the largest urban extensions of its kind in Britain, will help, and in Scotland’s biggest city, the council has approved over £115m in the current financial year to support the construction of around 1,600 new builds already programmed in, with a further 850 plus to be approved this year.

But Mr Choudhry said that 11 local authorities are behind their targets, with a -39 per cent shortfall in Edinburgh and a -50 per cent shortfall in Stirling, and others say, there is a clear need for more help.”We urgently need more social homes, particularly larger family homes in areas facing the greatest pressure, such as Edinburgh and Glasgow,” Ms Watson said. “Local authorities are facing an impossible task. They cannot fix this alone: they need support and long-term investment from the Scottish Government.”

Demand is significant elsewhere, such as the number of homes required in West Lothian (9,850), Highland (9,500) and Midlothian (8,850). In rural areas, where major housebuilders may not view projects as viable, there will be added pressure to meet such targets. One proposal floated is for the establishment of a dedicated housing land agency to acquire sites, provide necessary infrastructure, and prepare land for development.

Shrinking number of builders

The ignominious collapse last year of the Stewart Milne Group, once regarded as a flagship Scottish success story, was a warning sign of the wider challenges facing the sector, but it is not the only firm to have existed the market amid cost pressures

The number of SME housebuilders - a cohort deemed critical to the delivery of properties on brownfield sites and rural areas - has shrunk significantly in recent years. An analysis of new build sales from Registers of Scotland shows there were 125 SME housebuilders in 2024, down by eight on the previous year, and the lowest number for 20 years.

According to Homes for Scotland, the number of SME firms actively selling between 3 and 49 homes per year has fallen by more than two thirds since the global financial crisis, sparking calls for such companies to be excluded from certain regulatory requirements.

Ms Wood said the acceleration of lending to SME builders, coupled with improvements to the planning system, would support their work and deliver rural homes. “When nearly half of rural Scots view the lack of available housing as a key driver for people moving away from their local communities and work, these are critical actions,” she added.

Mr Choudhry, meanwhile, pointed out that volume housebuilders sold the majority of private new builds last year, and said it was vital that engagement with those firms was “central” to any discussion about the housing emergency.