CITY planners in Glasgow and Edinburgh are closing the door on much-needed housing investment by failing to support proposed residential developments in the emerging private rented sector, dismissing them as “yuppie flats”.

A property industry insider has hit out at what he believes is a misguided perception of private rented sector (PRS) or build to rent projects, which he said are driving city centre residential investment in major cities in England such as Manchester.

The source claimed investors are turning their backs on Scotland’s two biggest cities because planners are rejecting PRS schemes in the belief they are aimed solely at young professionals, and not suitable for families.

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“The local authorities just seem to have been way behind the curve in all of this,” he said. “They still don’t understand what it is.”

The source claimed one senior council in Edinburgh had recently branded PRS or build to rent schemes as “yuppie flats”, a description he claimed failed to understand the nature of the properties being proposed.

“That’s not what they are intended for,” he said. “But if this is going to be the emerging new tenure it is going to be, the sites have to be pitched at the middle market, because that is where the bulk of your renters are.

“Even this perception that they have that it’s just flats for yuppies, it is only a minority consideration.”

According to the insider, PRS developments now all account for four-fifths of all new new-build flats in Manchester. By contrast, he said, Scotland has only two operational schemes, at Forbes Place near Aberdeen and Lochrin Basin in Edinburgh.

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However, planning permission was recently secured by Moda Living for a 433 rental homes with the conversion of the former Strathclyde Police headquarters in Glasgow’s Pitt Street, while elsewhere in the city Inhabit has gained consent for a build to rent scheme on the site of the former Goldbergs store in the city’s Candleriggs. Moda has since submitted a planning application for a 200-home private rental development in Edinburgh’s Fountainbridge, again in partnership with joint venture partner Apache Capital.

The source claimed there was a view in the property industry that planning authorities are failing to grasp the opportunities PRS presents.

“There are a lot of factors underpinning it, including political risk, but the attitude of the planning authorities to the planning system is definitely a reason why some of the developers and investors have picked the ball up and run away,” he said. “It is certainly an issue. From speaking to clients and having been involved in deals, it’s definitely an issue.”

However, another well-placed property insider offered a different view, and said there were good reasons why planners in Glasgow have reservations about PRS. He explained the biggest reluctance among planners in Glasgow to back build to rent schemes is because there is not a shortage of homes for rent in the city.

However, he admitted that some of that housing stock is based in less desirable areas than others.

He also questioned the quality of the PRS schemes that are currently being proposed by developers.

The insider said: “I know that Glasgow city council is not opposed to it, but they keep on asking developers when they come in: what are you talking about?

"Because of course what you are actually talking about are things that are little more than rabbit hutches. Really, the standards are very poor in PRS that is being brought forward at the moment, so I think there is a reluctance in planning authorities in Scotland to jump on something which might deliver in the long term poor quality housing.”

He added: “PRS clearly has a niche, and it would maybe fulfil a niche in certain areas.

"It might be suitable in Edinburgh, it might not be. I think the reason it has not happened in Glasgow, to be honest, is the big investors like Aviva who back PRS are not interested in Scotland. And the reason they are not interested in Scotland is they don’t get the returns. And the reason they don’t get returns is because there is quite a lot of affordable housing in Scotland.”

Meanwhile, concern is widespread in the property industry that planning applications are taking much longer to be processed than previously because of the pressure local authorities are under due to funding cuts.

It is feared pressure on budgets is proving to be a major block to economic development in Scotland’s biggest cities.

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One property insider said: “The problem in planning authorities just now is basically because of cutbacks and loss of experienced staff. That is what is causing the current delays.

“If anyone had gone to Glasgow City Council five years ago, you would generally have got a Rolls-Royce service. Now it is hand to mouth. On the whole, the biggest problem just now is the reduction of staff, people being over-worked, totally unable to cope and going off work because of that; and not enough resources.”

A spokesman Glasgow City Council said: “The build to rent sector is an area of housing supply that both local and national government would like to see grow. We anticipate that there will be a substantial amount of PRS (private rented sector) homes being built in Glasgow in the very near future, with developments totalling over 3,000 units either having planning consent or ‘minded to grant’ status. A recent report from the private sector forecast continued growth in Glasgow for this sector in the years to come, with over 1,000 units expected to be built in the city over the next few years.”

A spokeswoman for City of Edinburgh Council said it is not within the gift of its planning department to reject a proposal for residential accommodation on the basis of whether the developer plans to sell or lease the properties involved.