Regulator suggests new council powers to help end Scots housing crisis

The CMA says that too few houses are being built especially in areas in which they are most needed, which is having a "negative effect" on affordability.

And in a damning analysis, the watchdog has warned ministers that the housebuilding market in Scotland is "not delivering well for consumers and has consistently failed to do so over successive decades".

The non-ministerial UK government department, which is responsible for strengthening business competition and preventing and reducing anti-competitive activities, says a range of evidence shows housebuilders building homes at their own rate - basing it on the number than can be sold without needing to reduce prices.

And it suggests that councils could be given powers to set the speed with which buildings are built along with powers to enforce this.

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It also suggests a shake up of the planning system to make it "more predictable and less costly, lengthy and complex for housebuilders".

It comes as the housing and homelessness charity Shelter has written to the First Minister asking him to come up with an action plan on how the Scottish Government will tackle the housing emergency parliament before the Easter recess.

Alison Watson, director of Shelter Scotland has told Humza Yousaf: "This is a housing emergency and we need urgent action to reverse it.

"The 10,000 children stuck in temporary accommodation cannot afford to wait a day longer."

Concerns are growing that a key Scottish Government pledge to deliver 110,000 social and affordable homes by 2032 has been delivered a "fatal blow" by the speed of creating affordable homes and cuts to the budget.

And the CMA says even that national target may still be insufficient to meet overall housing need.

The number of new affordable homes to rent being started for the nation's most vulnerable in Scotland has slumped to the lowest annual level since records began.

There were just under 3300 new home build starts in the social sector led by both housing associations and local authorities in the year to the end of September 2023 - a 40% slump on the previous year when there were 5535 and the lowest return in over 25 years.

It is believed to have fuelled the drop in the overall number of affordable homes to the lowest annual level for eight years.

It comes as three local authorities have declared a housing emergency - Glasgow, Edinburgh and Argyll and Bute - all citing shortages of affordable housing.

Glasgow cited "unprecedented pressures" after the Home Office planned to make around 2,500 batched asylum decisions in Glasgow by the end of this year, which the council would cost them more than £53m.

The CMA said it wanted to see a housebuilding market that delivered more homes and particularly in the areas of highest demand, which will in turn reduce the pressure on affordability.

It said that private sector housebuilders are likely to be more focused on building homes to meet demand rather than need, as that will determine what and how much they can sell.

As a consequence, the number of houses that housebuilders are likely to build is likely to under-deliver housing relative to what the CMA called the socially desirable level.

The CMA says housebuilders may have less incentive to provide housing aimed at consumers on low incomes.

It said that the Scottish Government's current national target for affordable housing may still be insufficent to meet overall housing need.

They found a "lack of predictability" for housebuilders when dealing with Scotland's planning systems saying the process is "significantly costly, lengthy and complex, and there are "mixed and inconsistent incentives" for local councils to meet housing need. They say the planning system was a "key driver" of the under-delivery of new housing.

They suggest potentially cutting the number of statutory consultees to reduce the delay caused by the consultation process.

It recommends raising planning fees to a "cost-reflective level" and ring-fencing them to improve the "capacity and resource" of local planning authorities.

It also calls for effective monitoring and and enforcement of deadlines for statutory consultees on planning applications.

It suggests moves to improve what it calls build-out rates - which relates to how quickly buildings can be built in an approved area.

The CMA suggests local planning authorities could be incentivised to increase the number of homes that are delivered through smaller sites and increase the diversity of the types of homes there are on larger sites.

It said that if those options would not make the necessary improvements it said the Scottish Government may wish to consider a more "active role" for the public sector in the purchase of land for development.

It also suggest that counclks could formally set out the build-out rate it expects housebuilders to achieve.

The CMA said the Scottish Government could also consider providing the councils with "greater enforcement powers where housebuilders do not meet the required build-out rate".

It said: "We recognise that identifying the most effective policy approaches to address the problems in the housing market is a complex matter, with a wide range of factors playing into housing market outcomes and trade-offs needing to be made between important policy objectives.

"We stand ready to engage with policymakers, housebuilders, and others in Scotland to explain the recommendations, options and wider considerations we have set out, and provide support for their implementation where the Scottish Government decides to act on these."

The Scottish Federation of Housing Associations (SFHA) and other groups have called on the First Minister to ensure more public money is ploughed into social housing to meet his "defining mission" to tackle child poverty.

In its programme for government in September 2021 the Scottish Government set a target to deliver over 110,000 affordable homes by 2032, with at least 70% of these being for social rent. Ministers said this would be supported with a total taxpayer investment of £18bn and that it would support up to 15,000 jobs.

But Scotland has been averaging 633 affordable housing starts a month since setting that target. To meet a 110,000 homes target they have to deliver at an average of 894 homes a month.

The affordable home starts in the last six month period is at its lowest since the start of quarterly records in 2019 with 2477 starting in the six months to September 30 - a 35% drop on the previous six month period and a 21% slump on the same period last year.

Meanwhile, a key Scottish Government bid to help end a housing and homelessness crisis has seen its annual budget slashed by £360m over the past two years.

The More Homes budget plans, which covers the Scottish Government's affordable housing supply programme has taken a cumulative hit of over half a billion pounds over two years - based against the 2022/23 allocation of £740.089m.

Housing campaigners say there has been a "staggering" £188.8m (33%) cut to the budget in the past year alone with the spending plans for 2024/25 set at £375.8m.

The affordable homes plan set out by Nicola Sturgeon in a Programme for Government in 2021 to "build on our investment in housing" had already seen its budget cut by £175.5m in 2023/24 dropping by some 24% in a year.

Trade body Homes for Scotland said it was reviewing the CMAL analysis which it said highlights "many complex interconnections involved in the delivery of new homes".

It added: "“As we continue to stress to the Scottish Government, there is a critical need for immediate short-term solutions to get Scotland’s planning system sorted if we are to ensure this and future generations are able to access warm sustainable homes that meet their needs and they can afford. We have already submitted the urgent actions we believe need to be taken and want to work with ministers, officials and other key stakeholders to implement meaningful change as quickly as possible.”

A Scottish Government spokesman said they were giving "careful consideration" to the recommendations made by the CMA.

The spokesman added: “The Scottish Government has delivered more than 126,000 affordable homes since 2007, over 89,000 of which were for social rent, including almost 24,000 council homes. We will invest £556 million in affordable housing in 2024-25, the majority of which will be for social rent."