Blog: A recovering housing market means the time is right to ‘go private’
Paul Kelly reveals the one change he believes would have a significantly positive effect on helping the Scottish Government reach its 50,000 new homes target.
Despite the shadow of uncertainty caused by all things Brexit, and a snap general election adding to the gloom, Scotland’s residential property market revealed glimpses of sunshine in 2017.
According to figures from estate agent Aberdein Considine, more than 28,000 Scottish homes were sold during the third quarter of 2017, up 4 per cent on July-September 2016 and 2,000 more than Q2.
New-build activity is also on the rise. According to the Scottish Government, almost 7,000 homes for sale were built in the first half of 2017 – an increase of 7.5% on the same period in 2016.
The year ended with good news for the sector, when the Scottish Government emulated their UK counterparts and scrapped LBTT for first time buyers on homes priced up to £175,000.
Indeed, they went further, pledging additional funding for skills bodies, colleges and universities to help address the construction skills gap. All welcome measures, although they don’t address the underlying issue; a widespread shortage of housing across all tenures.
Some industry watchers think that private house building could potentially slow down during 2018 due to the effects of Brexit, but I don’t see any real sign of this yet. Glasgow and Edinburgh in particular are extremely sought-after locations, with new-build homes especially popular. The combination of limited supply, consistent demand, and low interest, all lead me to believe that this will be another good year for most housebuilders.
As the managing director of a small family housebuilding business I have decided to re-introduce private housebuilding into our business again. Prior to 2008, we built a mix of private and social housing, but during that year I took the decision to ride out the tougher economic times by focusing on building social housing for registered social landlords such as Home Scotland Ltd, Wheatley Group and Sanctuary Housing.
This approach worked for us - we survived the recession and began to grow again from 2010. In the last eight years our headcount has doubled and we now employ 22 members of staff.
With evidence suggesting that the housing market was in steady recovery, in 2016 we decided the time was right to re-enter the private housing market with the launch of a private homes arm that would provide high quality, energy efficient homes. At the tail end of last year, we secured our first planning permission - under our new Briar Homes brand - to build 73 new homes near Baillieston in Glasgow.
We plan to launch the first of these homes for sale in February and have a list of pre-registrations. This gives me confidence that our timing is right and the development will be a success.
We are also awaiting a decision on a planning application to build 17 private homes in North Lanarkshire, and have land in place for a further programme of building across central Scotland.
On Briar Homes, we are working with the Housing Growth Partnership, a social impact investor backed by Lloyds Bank and the Homes & Communities Agency, who is partnering with small housebuilders to support the sustainable growth of their businesses. This support helps us to increase the number of homes we can build, with the ultimate aim of addressing housing affordability by increasing supply.
While I welcome the Scottish Government’s long term commitment to affordable housing, like most builders I feel that the target of providing 50,000 new homes over the term of the parliament will be very challenging to achieve.
This is due in no small part to the fact that efforts to speed up the planning process and free up more land for house building have not been particularly successful so far. To address this problem I’d like to see a presumption for planning departments to approve plans for affordable homes on non-contentious, zoned sites.
This one change would have a significantly positive effect, helping the government reach its target of course, but more importantly unlocking badly needed housing across Scotland.
- Paul Kelly is managing director at AS Homes (Scotland) Ltd