Challenges facing small housing developers: survey

5. Government Initiatives

This chapter addresses the following research questions:

• What is the level of knowledge of small developers about the Building Scotland Fund, the Help to Buy schemes, and the New Scottish Shared Equity scheme?
• What is their level of interaction with each scheme?
• How many homes have they sold under each scheme during the previous three years?
• How many homes do they expect to sell under each scheme during the next five years?

Building Scotland Fund

Respondents were asked if they had heard of the Building Scotland Fund and, if so, how they had interacted with it. More than half had not heard of it, and only five had applied to use it. The results are set out in Table 5.1 below.

Table 5.1: Knowledge of and interaction with the Building Scotland Fund

	Number of respondents
Applied to use it	5
Heard of it but not applied to use it	22
Not heard of it	30
Total	57

Respondents who had heard of the Building Scotland Fund were then asked how they had heard about it. The results are set out in Table 5.2 below.

Table 5.2: How respondents had heard about the Building Scotland Fund

	Number of respondents
Homes for Scotland	13
Press and media	9
Other builders	1
Estate agents	1
Friends	1
Total	25

Respondents were then informed that "the Scottish Government Building Scotland Fund was designed to support the development of new housing, modern industrial and commercial space, and industry-led research and development". They were informed that "the £150 million fund intended to invest £70 million during 2018/19 and £80 million over the 2019-20 and 2020-21 financial years, and that the funding threshold was reduced to £350,000 to encourage more applications from SMEs in January 2019". Respondents were then asked whether this made a difference to their organisation. A large majority of respondents said that they were not aware that the threshold had been reduced, compared to nine respondents who said that they were. Respondents were then asked whether this made a difference to their organisation; 14 answered yes, 15 answered no, and 27 did not know.

Help to Buy

Respondents were asked if they had heard of any of the Help to Buy (Scotland) schemes and, if so, how they had interacted with it. All respondents had heard of it, and almost one in two had made sales under it. The results are set out in Table 5.3.

Table 5.3: Knowledge of and interaction with any Help to Buy (Scotland) scheme

	Number of respondents
Registered and made sales under it	27
Registered and sales pending under the scheme	4
Registered with the scheme but no sales made under it	12
Heard of it but not registered on it	12
Not heard of it	0
Total	55

Three respondents chose 'Other, please specify'. Of these, two 2 said that the Help to Buy scheme was not applicable to them due to the low price threshold, and were deemed to have heard of the scheme but not registered on it. The final respondent said that they were not currently investing in housebuilding, and was excluded as their prior level of interaction with the scheme was unclear.

Another respondent who initially answered that they had not registered with any Help to Buy scheme later indicated that they had, and was therefore removed.

Respondents were then asked which out of two Help to Buy (Scotland) schemes that they had heard of. The results are detailed in Table 5.4 below.

The 43 respondents who had said that they had registered with Help to Buy (Scotland) were then asked which out of two Help to Buy (Scotland) schemes that they had registered with. The results are also detailed in Table 5.4 below. More respondents had registered with the Help to Buy (Scotland) Small Developers scheme than had registered with the Help to Buy (Scotland) scheme.

Table 5.4: Level of interaction with each Help to Buy scheme

Scheme	Heard of it	Registered with it
Help to Buy (Scotland) scheme	37	19
Help to Buy (Scotland) Small Developers scheme	35	28
Total	54	43

* Totals will not match bases as respondents could choose more than one category.

The ten respondents who had validly answered that they had not registered with Help to Buy (Scotland) were asked why they had not registered with it. Their responses were as follows, with the number giving each response indicated in brackets:

• It did not seem relevant for their business (8).
• It looked too complicated to register (1).
• Looking to register soon (1).

New Scottish Shared Equity for Developers (Lift scheme)

Respondents were asked if they had heard of the New Scottish Shared Equity for Developers (Lift scheme) and, if so, how they had interacted with it. Very few had registered on it, and almost half had not heard of it. The results are set out in Table 5.5.

Table 5.5: Knowledge of and interaction the new Scottish Shared Equity for Developers (Lift scheme)

	Number of Respondents
Registered and made sales under it	1
Registered and sales pending under the scheme	0
Registered with the scheme but no sales made under it	3
Heard of it but not registered on it	28
Not heard of it	25
Total	57

Two respondents chose 'Other, please specify' and stated that the scheme was not applicable to them due to the low price threshold. These respondents were deemed to have heard of the scheme but not registered on it.

Outputs: Past three years

Respondents were asked how many of the speculative build (or other) homes that they had developed over the past three years had been sold under the Help to Buy (Scotland) scheme. Most had sold none. The results are set out in Table 5.6.

Table 5.6: Number of speculative build (or other) homes developed over the past three years sold under the Help to Buy (Scotland) scheme

Homes	Number of Respondents
None	39
5 or fewer	7
Between 6 and 10	4
Between 11 and 30	3
More than 30	4
Total	57

Respondents were then asked how many of the speculative build (or other) homes that they had developed over the past three years had been sold under the Help to Buy (Scotland) Small Developers scheme. Most had sold none. The results are set out in Table 5.7.

Table 5.7: Number of speculative build (or other) homes developed over the past three years sold under the Help to Buy (Scotland) Small Developers scheme

Homes	Number of Respondents
None	41
5 or fewer	4
Between 6 and 10	2
Between 11 and 30	8
More than 30	2
Total	57

Respondents were also asked how many of the speculative build (or other) homes that they had developed over the past three years had been sold under the New Scottish Shared Equity for Developers scheme. One respondent said that they had sold between six and ten, whilst all 56 other respondents said that they had sold none.

The 28 respondents who had not sold any homes under any Scottish Government initiatives during the past three years were then asked to explain in their own words the main reason for this. The results were as follows, with the number of each explanation in brackets. Some respondents provided more than one reason:

• The price thresholds were too low (6).
• No buyers had been interested (4).
• Focused on building for the social sector (4).
• Focused building for the high-end market (2).
• Only recently registered (2).
• New company (2).
• Properties are typically bought by buy-to-let investors (1).
• Cannot compete with larger developers (1).
• Not secured planning permission for developments (1).
• Process seemed too complicated (1).

Outputs: Next five years

Respondents were asked how many of the speculative build (or other) homes that they estimated that they would develop over the next five years would be sold under the Help to Buy (Scotland) scheme. Most expected to sell none. The results are set out in Table 5.8.

Table 5.8: Number of speculative build (or other) homes estimated to be developed over the next five years that will be sold under the Help to Buy (Scotland) scheme

Homes	Number of Respondents
None	36
5 or fewer	5
Between 6 and 10	6
Between 11 and 30	2
More than 30	8
Total	57

Respondents were then asked how many of the speculative build (or other) homes that they estimated that they would develop over the next five years would be sold under the Help to Buy (Scotland) Small Developers scheme. Most expected to sell none. The results are set out in Table 5.9.

Table 5.9: Number of speculative build (or other) homes estimated to be developed over the next five years that will be sold under the Help to Buy (Scotland) Small Developers scheme

Homes	Number of Respondents
None	30
5 or fewer	5
Between 6 and 10	6
Between 11 and 30	9
More than 30	7
Total	57

Respondents were also asked how many of the speculative build (or other) homes that they estimated to develop over the next five years would be sold under the New Scottish Shared Equity scheme. Most expected to sell none. The results are set out in Table 5.10 below.

Table 5.10: Number of speculative build (or other) homes estimated to be developed over the next five years that will be sold under the Help to Buy (Scotland) Small Developers scheme

Homes	Number of Respondents
None	49
5 or fewer	2
Between 6 and 10	2
Between 11 and 30	4
More than 30	0
Total	57

The 18 respondents who estimated that they would not be building any homes under any Scottish Government initiatives in the next five years were asked to explain in their own words why this was the case. The responses were as follows, with the number of respondents included in brackets:

• The price thresholds were too low (5).
• The process seemed too complicated (2).
• Focused on delivering affordable homes (2).
• Not expecting to be offered (2).
• Cannot compete as the costs are too high (1).
• Lack of financial support (1).
• Focused on building for the social sector (1).
• Lack of customer interest (1).
• Not current target market (1).
• Not currently investing in house building due to other barriers (1).
• Still need to investigate the schemes (1).

Summary

The Help to Buy schemes are well known by small and medium housing developers, and roughly half of respondents had made sales under it.

Most respondents had not made any sales under either Help to Buy scheme during the past three years, and most did not expect to make any sales under it during the next three years.

More than half of respondents had not heard of the Building Scotland Fund, and only five had applied to use it.

Just over half of respondents had heard of the New Scottish Shared Equity scheme, but only four had registered on it.