Victoria Blair: Housebuilding – the compelling case for more investment

Victoria Blair: Housebuilding – the compelling case for more investment

Victoria Blair

Victoria Blair comments on the benefits of housebuilding and the need for more investment in the sector.

On 20th May the housebuilding sector got together for the first time in over two years at the flagship Homes for Scotland lunch. While providing a chance to network and celebrate the achievements of the award winners, it also provided an opportunity for reflection.

As the housebuilding sector works hard to get back on its feet after the significant challenges stemming from the pandemic, it has never been more important to consider the social and economic benefits which the industry brings to Scotland.

Earlier this year Homes for Scotland published a report on ‘The Social & Economic Benefits of Home Building in Scotland’.

The report highlights the sector’s important role as an employer.

There are many ‘direct’ jobs such as housebuilders themselves, who employ design, planning, finance, contract, engineering and project management professionals and a wide range of tradespersons.

This is in addition to ‘indirect’ jobs through the supply chain, and ‘induced’ jobs, providing goods and services for housebuilders and their suppliers.

The report estimates that together these jobs total up to 79,200 jobs in Scotland, equating to 3.5 jobs for each house built and approximately 3% of Scotland’s total employment.

Another key theme is the importance of creating varied and balanced communities and the value that delivering affordable housing as part of mixed tenure developments has in ensuring lower-income families are not negatively impacted.

The report discusses the impact that houses with poor insulation, heating and overcrowding can have on health. Modern housing developments now include open space, leisure facilities and bicycle stores and developments are located in areas where residents can easily access nearby walks and cycle paths. This is an important factor in improving physical and mental health.

In 2018/2019 there was £21.5m investment into sport and leisure facilities and £6.9m into public open space facilities from developer contributions paid via section 75 planning agreements.

The housebuilding sector also has a significant role to play in tackling climate change and reducing carbon emissions and is credited for showing commitment to doing so.

Housebuilders are increasingly ingraining zero emissions heating systems and enhanced energy-efficiency measures into new developments.

The re-use of brownfield land is key to both delivering new homes and environmental sustainability, useful in areas with a limited supply of land that can be developed. It is estimated that one fifth of homes built in 2019 were built on brownfield sites.

Emerging policies will require house builders to encourage more sustainable communities and healthier lifestyles, supporting 20-minute neighbourhoods (the idea of day-to-day needs being met within a 20-minute walk or cycle) and reducing reliance on cars. Larger-scale developments will be encouraged to incorporate new public and green transport links, and local employment uses.

The report also recognises the contribution made to the Scottish economy through the economic output the sector produces. In 2018, it is estimated that £1.8 billion was generated by the construction of homes, equivalent to 1.8% of Scotland’s output.

It is estimated that the acquisition of homes and sale of new builds produces approximately £21m in LBTT, paid on the purchase of land and buildings in Scotland, and on a local level, it is estimated that Council Tax generates nearly £2.6bn for Scottish councils every year.

So while it is evident that the housebuilding sector makes a significant contribution and brings many social and economic benefits to Scotland, the report also observes that the sector is hindered by the under-supply of housing - and if housing supply was increased to 25,000 houses being built per year economic output would be £0.3bn greater than in 2019, with £52m extra investment in local infrastructure.

There would also be significant social benefit through a greater supply of well-designed, energy-efficient homes, improving health and access to education.

These benefits cannot be ignored - and are particularly important as the country strives to overcome the challenges suffered as a result of the Covid-19 pandemic and to meet Scotland’s net zero targets.

In order to support housebuilders to achieve this higher supply, we need to see support from the planning process (at national, strategic and local levels) when new policies and requirements are being set.

All this evidence of the benefits housebuilding brings sets out the clear and demonstrable case for investment in the sector.

The UK and Scottish governments must now proceed to take advantage of these opportunities.

Victoria Blair is a senior solicitor at Burness Paull

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