Builders vow to ensure Scots not left behind following Budget for housing

Miller Homes stockWith the Chancellor yesterday announcing a raft of measures aimed at significantly increasing levels of home building and “reviving the British dream of home ownership”, Scotland’s home building industry vowed to continue to hold the Scottish Government to account to ensure those living north of the border were not left behind.

Key amongst the Chancellor’s statements were the abolition of Stamp Duty Land Tax on homes under £300k for First Time Buyers, £15.3 billion of new financial support for house building over the next five years (which includes money for the government to buy land as well as delivering supporting infrastructure) and more money to help SME builders.

This is in addition to the £10bn extra funding already announced for the English version of the Help to Buy shared equity scheme.

Chief executive of trade body Homes for Scotland, Nicola Barclay, said: “The Chancellor correctly identifies that not only have successive governments, over decades, simply failed to build enough homes to enable people’s home ownership aspirations to be achieved, solving the housing challenge also requires money, planning reform and intervention.

“The case is similar in Scotland, where we also face the same barriers that have resulted in the number of new homes being built each year flatlining at levels still 36% below the pre-recession levels of 2007. If we are going to effectively tackle Scotland’s chronic undersupply of housing and address affordability, it is imperative that we have an all-tenure target that identifies the large number of homes that are required. This would focus all our minds on ensuring that the system is geared up to enable all parties to deliver the homes needed.

“With Homes for Scotland and its member companies standing ready to work with Ministers and officials to make this happen, we will be watching the Scottish budget closely to ensure that any consequentials received from the housing announcements are similarly allocated, particularly in relation to unblocking the infrastructure constraints that impact those developers who are trying to build new communities.”

Barclay also considered the Chancellor’s review into the gap between planning permissions and housing starts, saying: “The main constraints on the use of land for housing are related to obtaining all of the necessary approvals and agreements, a process which is lengthy, complex and unpredictable.  So any action taken to address such blockers, or that identifies others, is positive.”

RICS Scotland said it is “vital” that the additional £2 billion that Scotland will receive from the Budget is steered towards tackling Scotland’s chronic housing shortage and infrastructure deficit.

RICS Scotland director, Gail Hunter, said: “RICS market surveys have consistently reported a lack of housing supply across Scotland over the last two years, resulting in increased house prices and rents within the residential sector. We urge the Scottish Government to utilise the additional capital funding to not only further their commitment to building 50,000 new, affordable homes by 2021, but also improve building rates across all tenures.

“From an infrastructure perspective, the additional monies must be put into infrastructure projects that return the highest economic and social impact, whilst stimulating the Scottish construction industry.

“RICS has long called for the expansion of City Deals across Scotland, and we welcome the announcement that progress is being made on city deals for Tay Cities and Stirling, and on a growth deal for the Borderlands. This ensures that all Scottish cities have either received, or are in line to receive, funding for city investment.”

“Finally, the Chancellor recognised the additional financial burden that stamp duty can cause home buyers, and introduced a cut for first time buyers (up to £300,000).  Scrapping Stamp Duty for first-time buyers may stimulate activity at a time when the market is subdued However, this does not tackle the underlying problem, and is something of a distraction from the need to increase supply. Whilst the LBTT framework in Scotland already supports first-time buyers, it will be interesting to see if the Scottish Government recognises the inhibitive nature of the current LBTT framework and make suitable amendments to the LBTT banding structure which will encourage market fluidity in all price brackets.”

However Finance secretary Derek Mackay said the Budget represents a real terms cut to Scotland’s revenue block grant of over £200m next year.

Despite a commitment of over £300m resource funding for the NHS in England this year, Scotland will receive only £8m in consequentials in 2018-19 due to UK cuts elsewhere.

And of the additional £2bn the UK government announced as being added to Scotland’s budget, over half of it – £1.1bn – are financial transactions which the Scottish Government cannot spend on frontline public services, and which have to be repaid to the Treasury.

“The reality is that over £1.1bn of the money being promised to Scotland over the next four years are loans that the Scottish Government cannot spend directly on frontline public services and that have to be paid back to the Treasury,” Mr Mackay said.