The ESPC Property Show: The housing shortage with Homes for Scotland

Paul
Hello. Hi, it's Paul and it's.

Megan
Megan,

Paul
we've reverted back. We've been swapping the instructions around. Yes. So today we're going to have a chat with Homes for Scotland. They are a organization that represents the new build sector of the market.

Megan
Yes. So we yes, spoke to Jennifer, who is Director of Public Affairs there.

Paul
Yeah. And we're gonna ask, we're gonna pose some questions to Jennifer about new build targets and the magic figure being.

Megan
25,000 new homes

Paul
and we'll find out through achieving our targets.

Megan
Yeah, we will. And yeah, I think shining a light on something that we speak about a lot, how demand outstrips supply in the property market and basically how they're hoping that that situation can be. Be solved.

Paul
Well, as we said all along, we need the supply tap turned on. And this really is the supply tap. So yeah, let's get right into the fascinating episode coming up. And today we have Jennifer Kennedy, Director of Public Affairs (I like that title) at Homes for Scotland, so we're gonna talk about all things you build really, aren't we? So from building to policy and all the other things that go with that. So I'm wondering if the 1st place to start Jennifer would maybe a little bit about the organization for Homes for Scotland. What is Homes for Scotland?

Jennifer
Yeah, well, Homes for Scotland's the representative body for the the home building industry. Our membership includes home builders and RSLS as well as lots of companies in the supply chain. Together, everyone delivers the majority of new homes that are built in Scotland and ouroverriding purpose. Is to deliver more homes for the people of Scotland, Yeah.

Paul
What is? What is RSL?

Jennifer

Sorry, registered social landlords.

Paul

Registered social landlords. So that would be things like housing associations, right? Understood. Got you.

Jennifer 

So Homes for Scotland is a has an all tenure approach. So we're not focused on just one or the other within the sector. We fully recognise the interdependencies that. Stretch between, you know, social, affordable and private for sale housing.

Paul
Yeah. And we, we will come on talk about the lights about the mix when you build the development now. And as you say, it's a, it tends to be a mix, doesn't it? When I say you build, you don't build them, but they're developers who are members of your organization. OK. So we're going to talk about targets, aren't we, Megan?

Megan
Yeah. So we noticed that obviously your research, your own research indicates that we should probably be building 25,000 homes per year. How are we doing towards that target?

Jennifer
Well, 25,000 was the number average number of new homes that were being built before the financial crash in 2007/2008.

Paul
And was that enough? Were we building enough back?

Jennifer
Well, even at that point, it still wasn't enough. We still had a, you know, a chronic under supply of housing at that point. But after that build levels fell by about 40%. So we've kind of been in recovery ever since then and we've been going in the right direction and then of course COVID hit and knocked us back a bit. So I think for the the last year the total number of new homes that was built in Scotland was 23,500, so on the up, but it's still not near where we need them to be and of probably of more concern at the present time is the position regarding the the number of new homes being started. That's on a downward trend and that's a real worry because obviously today's starts are tomorrow's completions.

Paul
Yeah. So you see what's coming down. Yeah, down the line, so.

Jennifer
And we've according to our research, we've already seen an accumulated shortfall of over 114,000 new homes since 2008.

Paul
That's a big number isn't it?

Jennifer
It is, yeah. So I mean you you can see the, the impact that the that the lack of supply is having.

Paul
Yeah. I mean population growth, more people living alone, lots of issues. And again, I suppose the seeds of this, I always thought, were the right to buy in the 80s when the council property was sold off and no one filled that gap that they were. No affordable homes were built for a while, so lots of lots of pressures. What would be the biggest barrier then to achieve in the that that magic 25,000?

Jennifer
Oh, there's so many barriers. Actually, Paul, I'm sure people wouldn't believe how many there are. Obviously one of the the major ones for us is the the planning and the wider consenting system for major planning applications. That's for developments of 50 units or more. They should be decided within 16 weeks. Currently they're taking nearly 40 weeks. And that's despite the number of major planning applications having reduced by about 50% since before COVID, right? So there's a considerable delays within the system

Paul
and without finger pointing, what would be a reason for that sort of length would you like?

Jennifer
Resourcing, I think it all comes down to that. Ultimately resourcing culture, we need a planning system that encourages and facilitates new development. Traditionally we haven't had that, but within the system itself we need to make sure we have the  skills and the the people that we need to, you know, get these houses through the system. So we actually get homes on the ground for the people that need them.

Paul
Because I mean it's interesting, isn't it? You will hear various governments, Westminster are saying we need more homes. We talk about it a lot in terms of rising house prices. As you say that has to be backed up with infrastructure doesn't it? And support to allow these things to move through a system?

Paul
Really.

Jennifer
Yeah. We're very much supportive of an infrastructure first approach and obviously making sure that all that infrastructure is in place in the first instance helps communities. I won't say welcome new housing. We might touch on that later. You know, it helps integrate the new housing into the the local communities. But unfortunately, that's not always. That doesn't always happen. Sure.

Megan
So when a developer starts to build a new development, what are the obligations that they have to make in terms of affordable housing and the kind of provision or the contract? Contribution to local amenities.

Jennifer
Well, developers actually have many obligations when they they start a development that includes the provision of essential community infrastructure and facilities that are related to the development. They all make considerable payments to the local authority to mitigate the impact to the new development, and that can go to things like schools, whether it's a new school, new classrooms, required Rd. improvements. And of course the the big thing that they contribute to is affordable housing. I think 65% of developer contributions go towards affordable housing. And in actual fact the Scottish Government is undertaking its own research and it says that for every private new home that's built, the developer will pay over £30,000 in contributions towards the local authority. So significant sums are involved.

Paul
Wow. So I think in short, as you say, the developer is funding, so and could it be as you say, could it be actually building a school? It could be, it could be those things that, I mean, I'm saying the developer will build them, but they will fund the.

Jennifer
Building they They fund it. Yes.

Paul
OK. Well, as you say it's, it's, it's giving back, isn't it really, And that might make me and and and would those things be transparent at the start when the application goes in? Is that part of the application where there's a commitment to the developer about what they will be doing in the area? Does that.

Jennifer
Well, once once they get their planning approval, they then have to enter into Section 75 agreement. So all that information is then sort of agreed between the developer and the local authority.

Paul
That's right. Understood.

Jennifer
But I should, I should caution, I'm not a technical planner, so I've I've never been involved in that aspect of it.

Paul
No. But the principle there that there's a commitment and those things have to be followed through on makes makes sense, doesn't it? OK well that I think is is interesting one of one of one of the things that we have seen when we when these homes do eventually as you say get get built energy efficiency, sustainable homes. I mean you talk about it a lot on you website. Are homes very different now from where they were built 20-30 years ago?

Jennifer
Well, homes in Scotland now are built to some of the highest technical standards in Europe and they're increasing all the time. So they are highly insulated, very energy efficient with the latest technology. So they are significantly cheaper to run than older properties.

Paul
Yeah. I I mean, Megan, you will know this, Yeah.

Megan
Yeah. I live in a well, relatively new build, flat. And yeah, we haven't had the heating on for a very long time. So it's very well insulated.

Jennifer
It's really good to hear, yeah.

Paul
And and we're seeing solar panels and and other things coming in and and I think is it passive house where you're talking about being carbon neutral in the drive of to to get to that level.

Jennifer
Yes, I mean there there is a big push towards Passive House but the the, the issue for Homes for Scotland and its members is. Passive House isn't scalable and the volume that we need to meet Scotland's housing needs? Certainly not at this moment in time, no. So yeah, the home building industry is already leading the way in the transition to net zero.

Megan
So yeah, is there a difference in the kind of layout of the new homes that are being built compared to maybe 20 years ago?

Jennifer
Well, I would say definitely we've obviously since COVID, we've seen a demand from people to have like the, you know, their own front and back door etcetera. But now there seems to be more interest in coming back into the cities. So again, I think it would be just about balance, but the benefit of sort of new homes is that they are built to meet today's modern needs. So they're very flexible in terms of their, their layout.

Paul
The range of choices is phenomenal, isn't it? I mean, I think there was a time when they built. I'm going back to the 80s now, when you you kind of got what you were given, whereas now, I mean, everything's up for choice, isn't it really?

Jennifer
Yeah. And I mean when you go and reserve your new home, you you can, you know, make your own specifications. So you literally tailor it to your own taste and requirements.

Paul
Hmm. To tiles, bathrooms, kitchens, finishes.

Jennifer
And even you know, if you're requiring any adaptations to be to be made, if if you're early enough in the build process, your building might be able to accommodate that as well, right?

Paul
So what convert the? Maybe the garage of space or no?

Jennifer
I'm. I'm just meaning, you know, for accessibility, of course. New new homes are already built to very similar standards to meet the housing for varying needs and all but two aspects, one of which I think is a having a lift. So they're already very accessible and adaptable throughout the the life of the the resident, but for example if you had wanted to put sort of a grab handles in your

Paul
Bathroom or whatever, sometimes builders can assist with that if it's early on, yeah, understood. And in terms of first hand buyers, because I I would imagine, you know the developers are building for catering for right across the market from first time buyers all the way up to maybe retirement and everything in between really. Are there any incentives for first hand buyers that the developers will offer or?

Jennifer
Well, it's extremely tricky for first time buyers at the moment, but that is actually one of the benefits of looking at new builds. And because you've got the the fixed price for one thing, so you don't need to have to think about offers over and there's often a range of help available from builders to help you get the property that you want. So that can range from contributions towards your deposit towards your monthly mortgage payments. To other things. So it's it's well worth any first time buyer getting in touch with the builder in the area they they're interested in living and to see what's available.

Paul
And generally, there's a site office, isn't there? There's so many on site.

Jennifer
Yes, there'll be a show home. Yeah, there should be the sales staff there that can talk you through the talk you through the process.

Paul
OK, good.

Megan
So Jennifer, what type of property do you think that we'll be building in 20 years time now there we've spoken about 20 years ago, never.

Jennifer
Yeah, that's a difficult one. Actually. That's probably the question I had most difficulty thinking about before I came in. I just think that we just just to have enough homes for. The people that need them, I think that's the, that's the, that's the biggest thing. Yeah. We were at a meeting at the Cross party group in the Scottish Parliament last night and the housing minister said, you know, the only way to end homelessness is to build more homes. And that's exactly true. And that's what we need to do. We need to make sure that we build homes for everyone in Scotland that needs them and to also meet the aspirations of those that live in Scotland or indeed want to live in Scotland so we can attract the talent that we need to be a successful economy

Paul
as you say it should be a should be right to have a something you call your home, shouldn't it really and in terms of just thinking that through there in terms of where we're going to be building, there is always this push pull around Greenbelt, isn't it? But I mean we are seeing a lot more brownfield sites being developed, aren't we? Is that do you see that?

Jennifer
Well, there's a definite push towards brownfield and you know, in an ideal world all houses would be built on brownfield. But the fact of the matter is there's just not the amount of brownfield land available to meet housing needs and also there can be many different issues associated with brownfield land in terms of its remediation. Having said that, residential is the most common use for bringing vacant and derelict land back into to use. But we need to have a balance in terms of land going forward because as I said, there's simply not enough brownfield to meet the, the housing needs of the country.

Paul
Yeah, I I've used jargon at brownfield, sorry. So this would be that it's been used previously. It's been like a factory or something has no or has been used for other purposes. And then it's redeveloped again. And I mean we see bits of that in Leith.

Jennifer
Yeah, that's what we're having, yeah.

Megan
Jennifer, something that you meant touched on earlier, I was just wondering if we could go back to you. So you'd mentioned about existing communities, maybe welcoming new builds. Is that something that you guys struggle, or do you notice that a lot of building developers struggle with having acceptance from the local community if they're building more homes?

Jennifer
I think maybe ultimately that could be the biggest barrier that we face. I don't know of any Home builder member that goes into a community and is welcomed. You know, people obviously don't like change. Their homes at one point were on a Greenfield. So you know what I think people have to be more understanding. I think of the need that exists and I think people don't understand the scale of the need that there that there actually is. I mean we all, I'm sure, I know I have examples from family and friends struggling with their housing. I know lots of other people do too. I've got 16 and a 17 year old. I'm wondering what on earth is going to happen to them in terms of housing. We need to work together to make sure that we've got homes for everyone.

Paul
Yeah, they're about decisions.

Jennifer
Yeah, so that so, I mean so that you know people's children and grandchildren can you know live in the same town or city or villages as them. So people in rural, rural areas aren't forced to migrate to the to the cities. There's too many examples of this at the present time.

Paul
Yeah, you make some really good points and and that point we all forget only, you know, even a a 19th, even a Victorian terrace was a new build Once Upon a time. You know, we we've had, we've always had new build, haven't we Really we? We always will

Jennifer
and I think you know, the needs of the silent majority also need to be recognised just as strongly as what is, what can be a very mobilised and well resourced. Minority of, you know, opposition, yeah.

Paul
I suppose one of the other aspects when we think about buying any home is protection for home buyers and Peace of Mind. Is there anything in the new build realm that you'd wanna talk about in that area?

Jennifer
Yeah. Two real benefits for buying new builders. You know they come with 10 year warranties, so you have that Peace of Mind when you move in. And we now also have the new homes quality board with an ombudsman service. So if you were to have any issue with your builder and couldn't resolve it you could go to the ombudsman service as a as a backup.

Paul
OK. So if you snag list and and and and there's a debate over it it can't get resolved you you could take it somewhere and and it's it's looked at objectively by yeah.

Jennifer
I mean, I think when you talk about snagging, I think we have to bear in mind that there is always going to be some form of snagging. Builders normally want to get that resolved just as quickly as consumers. But I mean it could be things like you know as the as the building dries out, there might be a little bit of plaster cracking with things like that, sort of things like that are to be expected. But you know if you have more fundamental issues that you're not happy, certainly the Ombudsman should be able to help you.

Paul
Brilliant. So Jennifer, I think we've been speaking quite a lot today about the, you know the desire and the and and the need to build more homes. So what would be the benefits if we if we managed to achieve 25,000 homes a year or plus for the next few years, what would be the benefits?

Jennifer
Oh, there's so many benefits, and it ranges from social impact to environmental as well as economic. For every new home built that supports about 3 1/2 jobs. So the sector as a whole currently supports about 80,000 jobs across the whole of Scotland, so it's a significant employer. It also utilises skills development. Obviously apprenticeships are very important in our sector, but just in terms of, you know, improved health and education outcomes so people have access to fit for purpose, accommodation helps alleviate overcrowding. And you know, a a healthy private sector also helps deliver more affordable housing. Yeah.

Paul
So it's because somebody's got to deliver those affordable homes.

Jennifer
Yeah, it's as far as we're concerned, it's a win. Win, yeah. And you know, a a very high level economic sense the the sector generates over 3 billion. To the economy each year. So yeah, it's it's a significant player now. I think maybe people don't quite appreciate how important the industry is.

Paul
I just say it's a big wheel that turns a lot of other wheels and as you say ultimately as well solves problems. And we've spoken for a while about affordability of homes, haven't we? And you know there's there's a shortage of supply. We say the same thing every month on the House price report. You know, even though prices have stabilised, it's it's only a matter of time before we see another rise again because we have a shortage of stock. You've already come on and said that and it's it's, it's going to continue until we really get on top of this. And in terms of construction, well, not construction, in terms of starting from scratch to ultimately having everything done, that's quite complex I would imagine.

Jennifer
It's an extremely complex and complicated process. It's also very lengthy and very costly. And extremely uncertain in terms of the delays that you might encounter along the way. So there are so many pieces in this jigsaw that have to come together before you. Someone actually has the keys to to a new home, whether that's in terms of roads, you know, just in terms of identifying housing need, in terms of what's actually really required to go in through the planning consenting system skills. And we've all witnessed a huge issue with material shortages and price increases. Yeah, utilities making sure we've got the right connections to to new homes. It's a very lengthy process.

Paul
I mean, ideally you'd like everything there, wouldn't you? So that it's the site's ready to start. I remember sitting in a Homes for Scotland meeting many years ago and that was described as utopia. You've been getting that point where you everything's there and then we can just build it would speed everything up, but. Think we're still quite a way away from that, are we?

Jennifer
Well, we just need to have the right environment to, to make sure we need a properly resourced planning system. We need a policy environment that supports home building and encourages it. And we need public to recognise the need for new homes. I think, yeah.

Paul
And a good project manager.

Jennifer
Yeah.

Paul
OK, that's fine. I think we've covered a lot of ground.

Megan
Yeah, I think that was you've answered all of our questions, Jennifer. We had, we had lots and lots in it. Yeah. No, we really appreciate you coming on the show. Thanks very much.