Small housing developers in Scotland: report

2. Output

Key points

Small developers that responded to our survey seemed to be optimistic about the future of their business with more of them expecting to deliver more homes over the following five years than over the previous three years in all the categories we explored

The majority of the respondents (59 of 66) did new build work and for 49 it was all or most of their work.

In the future 65 expected to undertake new build work and 55 expected it to be all or most of their work

Slightly more respondents expected to do other types of business in the future, for example, conversions

Fewer respondents built for the social sector than for the private sector but more respondents expected to build in each sector in the following five years than had in the previous three years

More respondents expected to sell homes in each of the price brackets in the following five years (especially the £230,000 to £250,000) AND they expected to deliver higher numbers than they had in the previous three years

The optimism was noticeable across the size grouping and urban/rural groupings but was slightly more conspicuous in the small and rural groupings

Introduction

This chapter addresses the question:

• What has small developers output been in the last three years and what do they expect it to be for the next five years?

We explored types of work, private and social sector building and sales by cost of homes, in each case we report on the findings for the group as a whole, and where there were discernible differences the findings for small and medium sized respondents, and the findings for rural, semi-rural and urban respondents.

Types of work

Types of work - all

Table 2.1 shows that for the majority of developers that responded to the survey (49 of 66) all or most of their business over the previous three years was new build. Ten further respondents did some new build and only seven did no new build work.

Table 2.1: Proportions of types of work undertaken in previous three years
Base 66

Proportion of their work	New build	Extensions	Refurbishment	Empty homes	Conversions
All	25	0	0	0	3
Most *	24	0	0	0	2
Some **	10	15	22	6	17
None	7	51	44	60	44
Total	66	66	66	66	66

* More than half ** Less than half

For only a small minority (5 of 66) of respondents converting buildings into homes was all or most of their business, 17 respondents did some conversions but 44 respondents did not undertake any conversions in the previous three years. In total the 22 who did conversions undertook 256 and average of 12 each, actual numbers undertaken ranged from 1 to 120.

For none of the respondents was extending existing homes, refurbishing or bringing empty homes back into use their main or only work. Fifteen respondents did some extension work, 22 some refurbishment and only six brought empty homes back into use. Those six brought a total of 30 homes back into use. Fifty one respondents did no extensions, 44 did no refurbishment and 60 did no conversions.

Table 2.2 sets out the respondents expected proportions of work for the following five years.

Table 2.2: Proportions of types of work expected in next five years
Base 66

Proportion of work	New build	Extensions	Refurbishment	Empty homes	Conversions
All	28	0	0	0	2
Most *	27	0	0	0	3
Some**	10	17	22	9	16
None	1	49	44	57	45
Total	66	66	66	66	66

* More than half **Less than half

More respondents expected to build new homes (65 as opposed to 59 who built new homes in the previous three years) meaning fewer developers expected build none (only 1 as opposed to 7). The increase in numbers of developers saying they expect to undertake new builds over the following five years could be seen as tentative optimism in this market.

The numbers expecting to undertake conversions and refurbishments in the next 5 years? are roughly the same as the previous three years, (21 and 22 of 66) suggesting that developers undertaking this type of business may specialise to a certain extent. Fifteen of the 21 respondents were able to predict how many buildings they would convert into homes over that time period; the numbers per respondent ranged from two to 150 and made a total of 549 (an average of 36).

Two more respondents than in the past expected to extend some homes in the future.

Three more respondents than those that had experience of bringing empty homes back into use in the past expected to do some of this work, again a possible sign of optimism. We also asked how many homes these respondents expected to bring back into use but very few were able to predict. That said, six respondents did estimate and said a total of 108 (an average of 18) ranging from 2 homes to 50 homes.

Types of work - small and medium

We explored the types of work respondents had experience of undertaking and expected to undertake by the size groupings (small -fewer than 30, medium - more than 30 builds per year on average). The findings for the small group are set out in Table 2.3.

Fourteen (of 52) respondents in the small category said all their work was new builds over the previous three years, this increased to 21 over the following five years. Please note that all of the six respondents that did not undertake any new builds in the previous three years but expected to undertake some in the following five years were in the small group.

Table 2.3 : Proportions of types of work- Small developers
Base 52

Proportions	New build		Extensions		Refurbishment		Empty homes		Conversions
	Past	Future	Past	Future	Past	Future	Past	Future	Past	Future
All	14	21	0	0	0	0	0	0	2	1
Most*	22	21	0	0	0	0	0	0	2	3
Some**	10	10	14	16	21	21	5	8	16	11
None	6	0	38	36	31	31	47	44	32	37
Total	52	52	52	52	52	52	52	52	52	52

* More than half ** Less than half

Table 2.4 sets out the same information for medium sized respondents . The trend was different to the small category, for 11 (of 14) all their work was new build in the previous three years and only 7 expected it would be over the following five years, that said, 6 said that most of their work would be new build meaning for 13 the majority of their work was estimated to be new build but suggesting they may be looking to diversify their business in the future.

Table 2.4: Proportions of types of work- Medium sized developers
Base 14

Proportions	New build		Extensions		Refurbishment		Empty homes		Conversions
	Past	Future	Past	Future	Past	Future	Past	Future	Past	Future
All	11	7	0	0	0	0	0	0	1	1
Most *	2	6	0	0	0	0	0	0	0	0
Some**	0	0	0	1	1	1	1	1	1	5
None	1	1	14	13	13	13	13	13	12	8
Total	14	14	14	14	14	14	14	14	14	14

* More than half ** Less than half

Types of Work - Rural, semi-rural and urban

We explored the proportions of new build and other types of business respondents did in the past and expected to do in the future by rural, semi-rural and urban categories. Apart from the general move towards more undertaking new builds there were no findings of interest. (Tables including this data are set out in Annex A for information).

Private or social sector building

Private or social sector building - All

We asked respondents if they built for the private sector or social sector over the previous three years and whether they expected to be building in these markets in the following five years. In each market more respondents said they would be building in the future than built over the previous three years. Once again showing some optimism for the future.

Table 2.5 shows that 52 (of 66) respondents built private homes speculatively over the previous three years and 58 (of 66) said they expected to build private speculative homes over the following five years. For private custom build the corresponding numbers were 24 and 30.

Overall there were fewer respondents working in the social sector in general but there was still a small increase in numbers saying they expected to build in the sector in the future compared to the past. Whereas 25 (of 66) built for housing associations or similar in the previous three years 28 said they expected to do so in the following five years; for local authority building the former was 15 and the latter 17.

Private or social sector building - Small and medium

Looking at the findings by size shows that for both the sizes the pattern is the same for private building with increases proportional to base numbers. On the contrary there was no increase in numbers saying they will build for the social sector in the medium sized category.

Table 2.5: Sectors built for in previous three years and following five years

Sector	All Base 66*		Small Base 52*		Medium Base 14*
	Past	Future	Past	Future	Past	Future
Private speculative	52	58	40	45	12	13
Private custom build	24	30	21	26	3	4
Housing associations	25	28	15	22	10	10
Local authorities	15	17	9	12	6	5

* Total will not match bases as respondents built in more than one category

Private or social sector building - Rural, semi-rural and urban

Table 2.6 sets out the findings by rural, semi-rural and urban groups. The largest proportional rise is for semi-rural respondents in the social sector (6 of 17 rises to 11 of 17). Almost all the expected rise in private sector comes from the rural group. Other than that there are no discernible differences between the developers working in the different areas.

Table 2.6 : Sectors built for in previous three years and following five years - Rural, Semi-rural, Urban

Sector	Rural - Base 38*		Semi-rural - Base 17*		Urban - Base 11*
	Past	Future	Past	Future	Past	Future
Private speculative	28	33	13	15	11	10
Private custom build	16	22	6	5	2	3
Housing associations	20	22	3	7	2	3
Local authorities	12	12	3	4	0	1

*Totals will not match bases as respondents build in more than one category

Homes sold by cost category

Homes sold by cost category - All

The previous two sections explored numbers of builds, we also asked respondents about the numbers of homes they sold divided up by price brackets. Please note that house prices differ significantly by location and as the respondents are weighted towards rural areas and, to a lesser extent, the west of Scotland this will impact on the findings. Once again we explored the respondents experience of the previous three years and expectations for the following five years. The findings are set out in Table 2.7.

Table 2.7: Number of respondents sold (and expecting to sell) in cost categories
Base 66*

Timescale	Under 175K	175K - 200K	200K - 230K	230K - 250K	250K to 325K	Over 325K
Previous three years	35	34	28	24	28	29
Following five years	42	46	39	35	35	34

*Totals will not match base as respondents sell in more than one category

Over the previous three years between 24 (of 66) and 35 respondents sold homes in each of the price brackets; the most (35) sold in the lowest cost category (under £175,000) and the least (24) in the £230,000 to £250,000 bracket.

Expectations for the following five years showed between 34 (of 66) and 46 respondents selling in each of the brackets, with £175,000 to £200,00 being the most prevalent at 46 and the highest price category (Over £325,000) being the least prevalent at 34.

Note that similar to the type of homes built, in each price bracket more respondents estimated they would be selling in it in the future than did in the past. For example, for homes under £175,000, 35 sold some over the previous three years and 42 estimated that they would sell some in that bracket over the following five years. This was especially noticeable in the bracket £230,000 to £250,000 in which the former was 24 and the latter was 35.

Looking at this in more detail, Table 2.8 sets out the increase in expected sales by volume. It shows that not only are more developers expecting to sell in each price bracket but that they also expect to sell higher numbers. For example whereas 12 respondents said they sold more than 30 homes in the under £175,000 price bracket in the previous three years, 17 said they expected to sell more than 30 in the following five years. The same increase shows in every price bracket, another example is in both the £200,000 - £230,000 bracket and the £230,000 - £250,000 bracket where five had experience of selling more than 30, 13 expected to sell more than 30 in the future.

The number of respondents expecting to sell between 6 and 30 homes in the future has also increased in every category whereas the number expecting to sell fewer than five has stayed the same or decreased in all but one category.

Table 2.8: Number of homes sold (and expected to sell) in cost categories - All respondents
Base 66*

Number of homes	Under 175K		175K - 200K		200K - 230K		230K - 250K		250K to 325K		Over 325
	Past	Future	Past	Future	Past	Future	Past	Future	Past	Future	Past	Future
More than 30	12	17	6	18	5	13	5	13	6	8	8	12
Between 6 and 30	9	17	19	19	14	20	10	16	13	17	11	13
5 or fewer	14	8	9	9	9	6	9	6	9	10	10	9
Total selling in category	35	42	34	46	28	39	24	35	28	35	29	34

*Totals will not match base as respondents sell in more than one category

Homes sold by cost category - small and medium

Table 2.9 sets out the same information split by the small and medium sized respondent groups. It shows that a significant increase in numbers from the small group expected to sell in every price bracket in the future whereas medium sized developers were more even over the past and future.

Table 2.9: Number of homes sold (and expected to sell) in cost categories - Small (Base 52*) and medium sized (Base 14*) respondents

Timescale	Under 175K		175K - 200K		200K - 230K		230K - 250K		250K to 325K		Over 325K
	Small	Med	Sm	Med	Sm	Med	Sm	Med	Sm	Med	Sm	Med
Previous three years	20	10	23	11	18	10	12	12	17	11	18	11
Following five years	32	10	32	12	29	10	24	11	23	11	24	12

*Totals will not match bases as respondents sell in more than one category

Homes sold by cost category - rural, semi-rural and urban

Table 2.10 sets out sales in cost categories divided by rural, semi-rural and urban respondents. The numbers expecting to sell in each price bracket rises for the rural group, it rises in all but one (£250,000 - £325,000) in semi-rural group and all but two (Under £17,000 and £250,000 - £325,000) in the urban group. This means that in the £250,000 to £325,000 category all the expected increase came from developers in rural areas (rising from 10 (of 38) in the past to 27 in the future).

Table 2.10: Number of homes sold (and expected to sell) in cost categories - Rural (Base 38*), Semi-rural (Base 17*), Urban (Base 11*) respondents

Timescale	Under 175K			175K - 200K			200K - 230K			230K - 250K			250K to 325K			Over 325K
	R	S	U	R	S	U	R	S	U	R	S	U	R	S	U	R	S	U
Previous three years	25	8	8	25	9	8	23	6	8	18	8	7	10	9	7	18	9	6
Following five years	30	10	8	31	12	10	28	9	9	25	10	9	27	9	7	21	10	7

*Totals will not match bases as respondents sell in more than one category

Despite the tentative optimism seen here respondents to this survey report facing a multitude of barriers to building which will be discussed in the next chapter.