Anger as John Swinney 'fails' over £4.5bn housing loss

Industry chiefs delivered the stark warning: “If the First Minister isn’t willing to invest his political capital into a new approach, then existing structures simply cannot deliver the response Scotland needs.”

In the face of a housing crisis, it was seen as a massive missed opportunity after a direct appeal from joint bodies to John Swinney seemed to gain little traction.

Housing minister Paul McLennan said when he delivered his ministerial statement in Holyrood on Thursday that work to introduce a tenure-neutral housing standard would be "rescheduled” and he outlined an ambition to reduce the number of children living in temporary accommodation.

A commitment to housing as a national outcome and the potential of the housing investment taskforce were welcomed.

Argyll and Bute, Edinburgh, Fife, Glasgow, Scottish Borders, South Lanarkshire, and West Dunbartonshire have declared housing emergencies (Image: Getty Images)

The industry is reeling from rent controls introduced in 2022 that were to be temporary, but are now being factored in Scotland's long-term housing plan.

This has been blamed for the near halting of housing developments across Scotland, with many changed to student accommodation, which is also required, but within a housing balance.

Investors pulled out of housing deals on the day the Scottish Government announced the move.

However, David Melhuish, director of the Scottish Property Federation, said that “the response to the housing emergency did not address the uncertainty for investors caused by the current Housing Bill”.

He told this column: “The provision in the Bill for rent control could mean a seven-eight year hiatus in rent control policy across the country, and with a potential rent freeze for five years of this period.

“This makes no provision for building, retrofitting or professionally managing rented homes and unfortunately investors are clearly seeing the proposals as un-investible. Just last week we saw a scheme previously earmarked as the largest build to rent scheme in Scotland, in excess of 800 new bespoke private homes for rent and located in the heart of Glasgow, has been sold by its investor with the purchaser looking to change the site use. This is but one of several former housing for rent sites that are being moved on to other uses.

"It is clear that the previously reported warnings that some £3bn of housing investment covering some 17,000 homes of various tenure is now at risk of not happening at all.

 "This investment is estimated to rise to some £4.5bn of economic value over a ten-year period if it is encouraged to come forward, providing a vital boost to the Scottish economy."

He said: "If we are to get a grip on the housing emergency we must start to build more homes of all tenures, and we must remove the current uncertainty for investors that is causing so much damage to housing investment in Scotland. We need to begin by improving this Bill, and we have little time to do so if we are to recover confidence in the investment community."

The mentioned build to rent specialist Get Living plan that included up to 1,500 homes at one stage had been in the making for five years. Galliard Apsley Partnership has acquired the Glasgow site.

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Jane Wood, chief executive of Homes for Scotland, said: "In light of the Minister's statement on the housing emergency ... we remain highly concerned at the pace for effecting the change Scotland’s population needs.

"This is against the backdrop of a quarter of Scotland’s population facing some kind of housing need, a 24% drop in new starts and completions of homes across tenures in 2023 and challenges across the regulatory environment impacting the delivery of homes.

"It also follows worrying evidence collected from Homes for Scotland members showing that 1000s of homes across tenures are stalled across the country due to budget restrictions.

"Given the scale of the issue and the strong interdependencies across the whole housing sector, it is imperative that we move forward together, challenging the status quo to find new ways of doing things in order to avoid the same outcomes, or indeed no outcomes at all."

The coalition that comprises the Association of Local Authority Chief Housing Officers, Chartered Institute of Housing, Homes for Scotland, Joseph Rowntree Foundation, the Scottish Federation of Housing Associations and Shelter Scotland wrote to the First Minister outlining actions including reversing the 37% cut to the affordable housing supply programme.

The coalition said in a joint statement: "It’s extremely disappointing that, despite having declared a housing emergency, the Scottish Government has made clear that it intends to proceed with business as usual."

Donald Anderson, a former council leader who is now a director at Playfair Scotland public affairs agency, said: "A whole swathe of the market has been killed and massive housing investment has been lost for the foreseeable future and that’s just at the announcement of rent controls.

"This must rank as the worst decision taken on the economy since devolution."

Deputy First Minister Kate Forbes was answering questions around Scottish taxes in business editor Ian McConnell’s exclusive interview this week.

He reveals that the "Scottish income tax burden for higher earners is 'under review'" in his series of articles.

Also this week deputy business editor Scott Wright opines: "Immigration has been a dominant theme of the General Election campaign so far. Unfortunately, while much of the debate has sought to address concerns held by some over the number of people wishing to come to the UK, virtually nothing has been aired about the positives immigration can bring."