Europe 2020: Scotland's National Reform Programme 2018

Chapter 3: Housing

The second country-specific recommendation set by the European Commission for the UK recommends that further steps are taken to boost housing supply, including through reforms to planning rules and their implementation.

One of the most important factors in any person’s quality of life is their housing. Good quality, warm and affordable housing is vital to ensuring a Scotland that is fair for this and future generations.

Housing is an area where the Scottish Government and its partners are already taking a range of actions to ensure that all people in Scotland live in high-quality, sustainable homes that they can afford and that meet their needs.

The Scottish Government’s target, over the current Parliamentary term, is to deliver at least 50,000 affordable homes, including 35,000 homes for social rent – a 75% increase on our previous social rent target. This ambitious plan has been backed up with investment of at least £3 billion representing a 76% increase on our previous five year investment.

Over £756 million is available in 2018-19 to fund this ambition – a 28% increase from the £590 million in 2017-18. Nearly 70% of the More Homes grant funding for this year, almost £615 million, is capital funding, primarily for social housing.

All Local Authorities across Scotland have received long term resource planning assumptions totalling £1.754 billion to March 2021, providing the certainty needed to deliver our target.

We exceeded our previous 30,000 affordable homes target by more than 10%. Over the last parliamentary term 33,490 affordable homes were delivered, 22,523 of which were for social rent.

Scotland has a range of schemes providing support to private sector housing activity, including the £195 million Affordable New Build and Smaller Developers Help to Buy (Scotland) shared equity schemes, which offers support to homebuyers from 2016‑19.

These schemes offer equity support of up to 15% on more affordable new build homes, with progressively reduced threshold prices targeting support to those most needing assistance to buy a home and adapting to improved market lending conditions. The new schemes build on the popularity of the previous Help to Buy (Scotland) scheme which assisted 8,000 homes to be purchased with funding of over £305 million and helped stimulate the home building industry with a total sales value of over £1.4 billion.

In addition, the Open Market Shared Equity Scheme ( OMSE) continues to assist first time buyers on low to moderate incomes and priority access groups to purchase a property on the open market by offering equity support of between 10-40%. OMSE is part of the Scottish Government’s commitment to deliver 50,000 affordable homes by 2021.

Financial Innovation

The Scottish Government is maintaining Scotland’s leadership in financial innovation and continuing to work creatively with its partners to innovate and optimise public resources to harness increased investment in housing, to deliver ambitious targets and boost the housing construction sector.

The innovative use of government guarantees, loans, grant recycling and leveraging in new sources of private funding is generating over £750 million of housing investment and supporting delivery of around 6,000 affordable homes – the majority of which will contribute to the 50,000 affordable homes target.

The National Housing Trust initiative, the first government guarantee-backed housing programme in the UK, was launched to stimulate the economy during a difficult period and increase the number of high-quality new homes, with no subsidy. This popular initiative has delivered over 1,400 affordable rented homes to date.

We remain committed to supporting expansion of homes for mid-market rent ( MMR) across Scotland. The Local Affordable Rented ( LAR) Housing Trust is a pioneering affordable housing model that is delivering 1,000 homes for MMR offering tenants high-quality, affordable homes across Scotland. LAR is supported by a £55 million Scottish Government loan, matched by private investment, lifting overall funding to £120 million. We are also progressing applications to our MMR invitation.

The Scottish Government is the first and only national government in the UK to invest in Charitable Bonds. These are a form of ethical investment which creates loan finance to fund affordable housing, and generate charitable donations. A £100 million investment is supporting the delivery of nearly 1,000 homes.

The Scottish Government has encouraged pension funds to invest into affordable housing – with Falkirk Local Government Pension Scheme fund investing £30 million through Hearthstone. The initial funding from Falkirk should finance around 300 affordable homes over the next 10 years.

We are boosting the supply of affordable housing through prudential borrowing, and delivering City Deal commitments on housing. This includes consent to on-lend up to £248 million along with a £16 million capital grant to City of Edinburgh Council, to support a new city region housing company to deliver a minimum of 1,500 homes at mid-market rent and competitive market rent levels.

We are also supporting and enabling investment in the emerging Build-to-Rent housing market, with the potential for delivery of an additional 2,500 new homes for market rent, stimulating up to £500 million private investment.

Scotland’s Planning System

The Scottish Government published the “Places, People and Planning Position Statement” in June 2017, setting out proposed changes to be taken forward following the recommendations of the independent review of the planning system and further consultation. These changes aim to streamline development planning, strengthen community engagement, support the delivery of homes and infrastructure and improve resourcing of the planning system. A Planning Bill was introduced to the Scottish Parliament in December 2017. This includes proposals to strengthen the role of the National Planning Framework ( NPF) and amend the development planning system in a way that will provide greater clarity on housing land requirements. Work on preparing the next NPF will start in 2018, with a view to adoption by the end of 2020.

Research has been commissioned to identify the variability in approach taken by different planning authorities in using Housing Land Audits to assess compliance with Scottish Planning Policy. The research will help inform how a more standardised approach to producing Housing Land Audits can be developed and identify options for future policy and guidance.

The Scottish Government is also supporting alternative housing delivery models. £160,000 has been provided to develop case studies that demonstrate and promote the value of self and custom build housing as an alternative mainstream housing delivery model. The seven pilot projects will include exploring the potential for affordable rural self-build and researching the potential for custom build at scale. Planning Delivery Advice on Build to Rent homes was published in September 2017 and sets out the key opportunities of this sector to contribute to housing supply and the challenges which it presents to decision-makers.

In addition to housing, major infrastructure improvements have also been delivered and significant progress continues to be made. In total, over the course of 2017 and up to March 2018 infrastructure projects worth £3 billion opened to the public across areas such as transport, health and education.