Scotland’s housebuilders rallying against key elements of the previous SNP and Green administration’s new homes law is the backdrop.

There is expected to be pressure on new First Minister John Swinney to act on housing in the wake of the collapse of the Bute House Agreement and resignation of Humza Yousaf.

The change of leadership came after one of a number of contentious legislative elements was raised when the chief executive of a major Scottish housebuilder urged a Holyrood rethink on aspects such as rent controls.

This followed weeks of discontent around the Housing (Scotland) Bill, which I covered and have collated.

Shelter Scotland said "housing must have its own seat at the Cabinet table" with a Minister dedicated to the homes shortage crisis. 

Springfield Properties revealed that it saw a major deal collapse on the day the Scottish Government introduced rent controls, while it is now estimated £3 billion in wider built to rent investment is put at risk by formalising the policy.

The Herald: 'Whilst introduced with good intentions, the intervention has had unintended consequences with private rents across Scotland soaring upon relet and investors exiting to redirect funds elsewhere,' said Innes Smith'Whilst introduced with good intentions, the intervention has had unintended consequences with private rents across Scotland soaring upon relet and investors exiting to redirect funds elsewhere,' said Innes Smith (Image: Springfield Properties)

Innes Smith of the Elgin-based, London-listed firm told The Herald: “The day the Scottish Government announced a rent freeze we immediately saw a deal to deliver 300 quality, energy efficient PRS (Private Rented Sector) houses collapse, and this investment has been lost.

“These homes were designed for families seeking homes to rent sustainably and would have eased pressure in areas of high housing demand including Inverness and Midlothian.

“This was planned as the first of many deals using private investment to enable an increase in housebuilding across multiple tenures.”

The housebuilding companies who provide Scotland with the vast majority of its homes have collectively criticised plans for permanent rent controls and also questioned net zero targets related to new-builds after the Scottish Government changed its target.

Homes for Scotland, the body representing around 200 companies which together provide most of the new homes built across the country, has also called for a review of the proposals and timescales after Holyrood abandoned its 75% emissions reduction by 2030.

I have written a series of Business Week columns around issues housebuilders are raising with the Scottish Government around the Housing (Scotland) Bill, which has now been brought forward.

Temporary rent controls introduced partly to help ease the cost of living during a crisis look likely to form a part of legislation, but the impact this is having on the build to rent market in Scotland is significant, according to industry insiders.

In response, Patrick Harvie, the Green MSP,  then pointed to rent controls and investment in Europe, and said Holyrood is working with industry on future net zero regulations but seemed to remain firm on key points.

The backdrop is a growing housing crisis across the country, with four local authorities declaring emergency status because of the shortage of homes.

I wrote that Scotland’s housebuilders have warned the new SNP and Green Housing Bill risks "serious unintended consequences" amid concerns of investors walking away from funding homes in Scotland.

Homes for Scotland said that "levels of existing housing need in Scotland are more complex and much higher than is currently being accounted for".

A study found 28% of Scottish households, almost 700,000, currently have some form of housing need, including overcrowded households and those in need of affordable housing.

The study by Rettie and The Diffley Partnership was commissioned by Homes for Scotland, which has on its board key figures including Doug McLeod, Scotland director for Barratt Homes, Mr Smith of Springfield Properties, and Janice Russell, managing director of McTaggart Construction.

Jane Wood, chief executive of Homes for Scotland, said that “it is unlikely this Bill will deliver the urgent action required to increase the number of much-needed homes that are required across all tenures”.

She said: "There is nothing to support the under-resourced planning system which takes over 62 weeks to process a major housing application or improve the overall policy and regulatory environment which currently serves to hamper the delivery of new homes.

"It could also have serious unintended consequences given that the rent controls introduced in 2022 have resulted in investment in new homes being diverted to other parts of the UK, while rents here continue to spiral.”

I also revealed that the critical build to rent market in Scotland has been "basically closed" until there is more clarity around the SNP and Green administration’s homes law.

Unease around rent controls is growing to the extent the market has virtually drawn to a standstill in Scotland, a senior industry figure told The Herald, while construction and investment continue unabated south of the Border.

There is also a call for a review of new net zero laws impacting homes provision after the current Holyrood administration ditched its own emissions targets.

Homes for Scotland wants the SNP and Greens to rethink the viability of net zero legislation from a housing delivery perspective.

Mr Harvie told The Herald: “Our Housing Bill includes a package of important reforms to the rented sector that aim to improve affordability and strengthen tenants’ rights. This includes the introduction of an effective system of rent controls in the private rent sector, which will improve affordability for tenants while recognising the importance of landlords investing in property quality.

"Our European neighbours have shown that rent control can be compatible with ongoing investment, and we will continue to engage with stakeholders from across the sector on delivering our commitment to introducing a longer-term system of rent controls for Scotland. Alongside this, we are committed to encouraging new and different approaches to attracting investment into our housing sector and the launch of our new Housing Investment Taskforce this month is an important step in that work."

He also said separately: “We are currently undertaking a review of energy standards – engagement began in early 2023 and Homes for Scotland are a contributing member of the associated working group.

"We intend to consult on proposals in late summer, to support our commitment to Parliament to confirm any changes to regulations in December this year."

This article first appeared in the Business HQ Monthly supplement.