Dr Michael Marshall: Affordable housing need in Scotland post-2026

Dr Michael Marshall

Last week, CaCHE published a new report – Affordable Housing Need in Scotland Post-2026. The report aims to quantify the number of affordable homes that are required to meet need over the course of the next Scottish Parliament and provide an indicative budget. It is the third iteration of previous work conducted in 2015 and 2020 which helped make the case for investment in affordable housing and provided a foundational evidence base for a period in which social housing delivery in Scotland outpaced England on a per household basis.

As with the previous reports, the recent research was commissioned by the Scottish Federation of Housing Associations (SFHA), Chartered Institute of Housing (CIH) Scotland and Shelter Scotland. In this blog, I give an overview of the headline findings and pick out some aspects of the research, and policy response, that may have received less attention.

Headline findings

The headline figures from our research are stark. To meet need, Scotland requires an additional 15,693 affordable homes annually between 2026 and 2031. And our indicative five-year budget for the Affordable Housing Supply Programme (AHSP) is £8.2 billion. By contrast, the 2020 research found that 10,600 affordable homes were required annually. And the high point of AHSP delivery in recent years was 10,466 affordable completions in 2022/23. Therefore, meeting increased need will require an associated increase in delivery of around 50%.

Lying underneath the headline figures are several indicators of housing system pressure which have risen sharply over the past five years in Scotland. Open homelessness cases have increased by 45.5% since the 2020 research, temporary accommodation usage has increased by 38.3%, and issues such as disrepair and fuel poverty have become more common in the private sector. The research also suggests that these pressures are likely to endure over the next parliamentary term as the population grows and affordability remains constrained – over half of the households projected to form in the next five years are expected to be unable to afford market housing.

The focus of the research was on quantifying need. Understanding the causes of issues such as increased homelessness is a matter for further research. Yet the key message is clear – meeting the need for affordable housing will be a significant challenge for the next Scottish Parliament. Indeed, it would be an ambitious undertaking at any point in time. But especially so during a period where approvals and starts for affordable housing have fallen in recent years due to construction inflation, interest rate increases, and fluctuations in the AHSP budget.

What you may have missed

Our research focus was on the national level of need in Scotland. But there has been a clear shift in the geography of need over time, with rising levels of need in Eastern authorities such as City of Edinburgh, the Lothians and Fife. This is the most populous region of Scotland, so we should expect absolute levels of need to be highest. But it is also the highest when need is measured on a per 1,000 households basis. As such, one of the implications of the research is to provide further support for previous CaCHE research that recommended reviewing the resource allocation mechanisms for affordable housing to more closely align them with objective indicators of need.

A further interesting finding from the research is that there has been an enduring decline in the number of annual social housing lettings in Scotland post-pandemic. The number of social housing lets was roughly 4,000 homes lower in 2023/24 than in 2019/20. This has affected the capacity of the existing social housing stock to meet need through turnover and new lettings and is one of the contributing factors to the increased level of need (although to a far lesser extent than issues such as homelessness).

For fans of statistical appendices, additional analysis conducted by the research team shows the decline in lettings is overwhelmingly the result of an associated decline in the number of social homes becoming empty each year. Although the time taken to relet a property has also increased during this period, our analysis suggests this has had a far smaller effect than simply fewer properties becoming vacant. The reasons for declining turnover in the social stock could be an interesting avenue for future research given that reletting an existing property is far cheaper than building a new one.

Finally, the Scottish Government published their Housing Emergency Action Plan three weeks before the publication of our research. The Government has committed to investing £4.9 billion over four years to deliver 9,000 affordable homes annually. Obviously, this is short of the 15,693 home requirement estimated in the research, and around £400 million less than our indicative budget annually.

But what is perhaps less obvious on first reading is that the Government’s announcement suggests there is now a consensus that a substantial increase in grant funding is required to boost the affordable housing sector’s capacity to deliver. Measured on a per-home basis, the Scottish Government’s funding commitment is as generous as our budget. The reason the total budgetary estimates differ is purely due to the difference in the total level of homes to be delivered. Only time will tell what this means for the households currently at the sharp end of Scotland’s housing emergency.

• This article was originally published on the UK Collaborative Centre for Housing Evidence website.