Challenges facing small housing developers: survey

1. Introduction

The Scottish Government's vision is that everyone in Scotland will live in affordable, quality homes that meet their needs. The National Performance Framework includes an indicator of the percentage of households who report being either 'very satisfied' or 'fairly satisfied' with their house or flat.^[2] In order to achieve satisfaction with housing, it is vital that all developers, including small and medium-sized developers, can contribute to creating affordable, quality homes.

During summer 2019, the Scottish Government conducted an online survey of small and medium-sized enterprise (SME) developers to find out what obstacles they had experienced during the previous three years and expected to experience during the next five years. Fifty-seven developers responded.

This survey largely based on a similar survey of SME developers conducted during the summer of 2016. The 2016 survey suggested that small housing developers in Scotland were optimistic about the number of homes that they expected to deliver during the five years following the survey. However, they expected to face a number of obstacles, with financial barriers the most common. Difficulties with the planning system and infrastructure were also highlighted as common concerns.^[3]

This report investigates the experiences and expectations of small developers in Scotland, and considers the ways in which the Scottish Government could help them to deliver more homes.

Research Questions

The survey was designed to provide information to inform policy decisions for enabling small developers to build new homes. It aimed to answer the following questions:

• What was the output of small developers in the last three years and what did they expect it to be over the next five years?
• What were the current barriers to small developers building homes?
• How did small developers envisage the barriers changing (improving, getting worse) over the following five years?
• What actions or changes did small developers think were needed to improve their output?
• What level of knowledge and interaction did small developers have about relevant Scottish Government initiatives, such as the Building Scotland Fund, the Help to Buy schemes, and the New Scottish Shared Equity scheme?

The 2016 survey asked developers about their experiences during the previous three years and their expectations for the following five years. These timeframes were retained for consistency. The terms 'small (housing) developers' and 'SME (housing) developers' are used interchangeably in this document.

Geography

The respondents represented a diversity of small and medium-sized housing developers in Scotland. They covered all regions of Scotland, including rural, semi-rural and urban areas.

Table 1.1: Respondents grouped by Help to Buy local authority area groups

Respondents were asked to state the local authority area in which they carried out the largest proportion of their business and to then list any other areas in which they undertook business during the past three years. The full detailed results are set out in Annex A as Table A.1 and show that survey respondents delivered in 30 of the 32 local authority areas in Scotland (Argyll & Bute and Na h-Eileanan an Iar were the only areas not represented). Respondents were then grouped by the same areas used in the 2016 report for consistency. The results are set out in Table 1.1 above, which shows most respondents delivered their main business in the West of Scotland and the South East of Scotland, while only five delivered their main business in the Highlands and Islands.

Table 1.2: Respondents by Rural, Semi-rural and Urban categories

Respondents were characterised as rural, semi-rural and urban according to the Randall Definition^[4] as set out in Table 1.2 above.