Scotland’s housing emergency leaves us cold at Christmas

The latest official figures on the extent of homelessness make for bleak reading over the festive period. More than 10,000 children in Scotland will be visited by Santa, not in their own home, but in temporary accommodation. That’s if they get any presents at all.

Scotland’s housing emergency is showing little sign of abating, at least in how the most vulnerable in our society are being affected. Shelter Scotland, the leading housing charity, has warned that two in five calls to its helpline at Christmas are from families urgently seeking temporary housing.

Usually, there are multiple reasons why a family ends up without a permanent home. Relationship breakdown, domestic violence, mental ill-health, addiction and discharge from prison are all major drivers of homelessness. But the housing emergency reflects a failure to keep the supply of housing at a level that meets Scotland’s housing needs.

And we are all affected in some way – even those who are fortunate to have a warm home to sleep in each night – whether first-time buyers looking to get onto the housing ladder, downsizers searching for a retirement flat or families looking to relocate to a different area for work.

Scotland will not be able to meet its economic ambitions or create a fairer society without action on housing. That requires building more and warmer homes in the places where people want to live for family, work, education and other reasons. As shown in Prosper’s report Housing Supply for a Growing Economy, which was published earlier this year, since the financial crisis in 2008 Scotland has built 100,000 fewer houses than were needed to meet market demand.

Unfortunately, recent indicators do not bode well: in 2024, the most recent year figures were available, construction started on 15,000 homes, the lowest figure in more than a decade. In the first half of this year, affordable housing delivery has been significantly behind target at 2,500 homes, a 25% decrease on the year before. By comparison, we believe that the Scottish Government should set an ambition of building 25,000 homes a year.

However, there are solutions and there are encouraging signs that the Scottish Government is starting to adopt them. Màiri McAllan was appointed as housing secretary by John Swinney in June, the first time that housing has had a dedicated cabinet position. This indicated that senior politicians recognised this was a problem that needed to be tackled at the highest levels of government.

Since taking up her new position, Ms McAllan has been busy, publishing an action plan for the housing emergency in September and passing a revised Housing Act through Holyrood. These have included announcements of £4.9bn of public support for affordable housing, spread over four years, as well as confirmation that build-to-rent (BTR) and mid-market rent (MMR) developments will be exempted from rent controls.

Both are recommendations that we made in our report and have been warmly welcomed by industry for providing certainty and stability. However, these new measures will need to deliver results: shovels in the ground, house moves being made, leases getting signed. Attracting investment will provide the means to solving the housing emergency and this is why the exemption from rent controls for certain developments is vital.

Additional investment needs to be channelled to the right places, which requires an ‘all-tenure approach to new housing delivery’. That means supporting the full spectrum of different types of living – owner‑occupied, private-rented, mid-market rent, social or affordable rent, build-to-rent and shared ownership – and not privileging one over the other. In effect, social concerns such as tackling homelessness, and economic interests such as increasing housing investment, should not be pitted against each other. As Ms McAllan told a recent gathering of industry leaders, “a rising tide lifts all boats.”

Reform of the planning system will be the key enabler of this goal. The Scottish Government has introduced a raft of measures in recent months to bring stability and predictability to the planning system, including specific attention on development sites which have stalled, an emergency-led approach to determining planning applications, proportionality for smaller housebuilders, a new national planning hub and local authorities now need to inform ministers of developments of more than 10 units. All of this is encouraging, but Ms McAllan and her ministerial colleague responsible for planning, Ivan McKee, will need to be prepared to go further if the desired results do not materialise on the ground.

There is also more that industry could and should be doing to accelerate housing construction. Although planning delays have been an important factor in pushing up the cost of building homes, so too are skills shortages and construction inflation because of the limited supply chain in Scotland. Up to half the cost of building a new house can be in the wage bill for worker time. It is also worth bearing in mind that in many parts of Scotland, especially in rural areas, the cost of building a new home is higher than the price a developer will receive for selling it.

More efficient housebuilding, such as the manufacturing of modular components in off-site factories – known as modern methods of construction (MMC) – is one way around this as an ageing society and restrictive immigration policies limit the potential construction workforce. And we must not give up on training young workers for careers in the industry, which requires investment in upskilling and re-skilling courses at colleges and in apprenticeships.

The housing secretary has remarked that announcing a plan – as she did in September – was not enough. Words need to be backed up with action. McAllan’s success (or otherwise) in tackling the housing emergency will require getting lots of ducks in a row: planning authorities, builders, landlords, housing associations, the tertiary education system, homelessness charities and many more.

Since taking up office – and getting the Housing Act finally on the statute book – Màiri McAllan has brought some calm to Scotland’s housing sector. Creating the right conditions for building new homes will require a careful balance between different interests while continuing to project stability, certainty and confidence. Hopefully the new year will herald some much-needed change.