On Wednesday, April 19th, our new First Minister launched his flagship “New Leadership; a Fresh Start for Scotland” into rather choppy seas. With the SNP’s former leader, CEO and Treasurer all under a cloud, whatever message he hoped to get across was lost in a blizzard of press speculation. He avoided banging on about independence, focussing instead on: Equality; Opportunity; Community. Unfortunately, he omitted to mention what pre-occupies many: housing.
Though Nicola Sturgeon failed to ease a decades-old housing crisis, she at least supplied a sticking-plaster remedies by imposing a rent freeze. That freeze has now thawed. Despite it, private rent in renewals rose by 5%, and new lets by 10%.
Whether Patrick Harvey’s proposed Rent Control, and 3% “cap” will be effective is anyone’s guess. While this might ease inflation, it leaves landlords to cover rising costs while mortgage tax relief is phased out. This may reduce incentive to repair and invest in private rentals to meet overflow demand from insufficient social housing.
The cause of this crisis is not hard to find: there are simply not enough homes available, especially at the affordable end of the market. This originated 40 years ago in the right-to-buy policy. Though the principle itself is good, requiring councils to set ALL proceeds against debt made building replacements unaffordable. Over the next four decades, council tenancy fell steadily from 54% to 12%. Private ownership and rentals both doubled—to 1.42m and 334,000, respectively. See Figure 1 below (Source: Scottish Government).
Figure 1: Change in House Tenancy by Type in Scotland 1981-2019
The proliferation of housing associations to evade right-to-buy did provide a second source of social housing, but at higher rents, a loss of economies of scale, and confusion ti all. The private market kept expanding to meet the need, but at a cost to tenants. With shrinking numbers of social housing, waiting lists grew enormously. Ordinary punters havd scant hope of ever being offered a house.
As a result, rents in Scotland now average £970 per month. This is up 45% over the last 10 years. Edinburgh average is now £1,370—up 65% over the same period. This has taken “mid-market rent” in Edinburgh out of reach for many.
There is a total of 2.67m homes in Scotland. This represents an increase of 34% on the 1.97m in 1981, as compared to the 6% increase in the population as a whole. Put another way, demand for housing grew over five times faster than the population. Of this total stock, 320,400 (12%) are local authority units, 318,369 (11%) Registered Social Landlords (RSL’s),342.199 (16%) private rental, leaving 1.55m (56%) owner-occupied. There are also 3% vacant and 24,487 (1%) second homes.
This represents a radical change in Scotland’s housing mix. Council and RSL housing together are regarded as “affordable”, but even were this term accurate, the relative halving of availability is itself an indicator of the housing crisis. Council house rents are genuinely low across the country. However, RSL rents, although well below private rents, vary between 10% and 25% higher than council rents in the same area. This effect is exacerbated by six councils, including Glasgow City. turning their entire housing stock over to RSLs.
The Scottish Government, while speaking of a housing crisis, have done little to meet it. They often resort to obfuscation. For example, their publication on affordable homes states:
“The total completions for the 12 months to end March 2022 rose to 6,557, an increase of 72% (2,744 homes) on the 3,813 social sector new build homes completed in the previous year.”—Scottish Govt Housing Statistics, ISBN 9781804354209
Sounds great? Actually, the previous year’s build had been crippled by Covid-19. The figure for the year to March 2020 had been barely 14,000 of all types, a steep drop from over 21,000 the previous year—and making the 2022 figures look stellar. This also compares poorly with private completions of over two-and-a-half times that (17,225). This imbalance of affordability is not clear from official charts showing overall figures, such as Figure 2 below. (Source: Scottish Government)
Figure 2: New Homes Starts and Completions in Scotland, 2007-2020
“ScotGov affordable home target concerns as house approvals slump. Concerns have been raised that the number of affordable homes being approved for build has slumped to the lowest level for eight years.”—The Herald, 28th March 2023
For comparison, the late 1960s and early 1970s saw 41,000 to 43,000 new houses completed each year. This was predominantly public sector housing with barely 7% being private sector. By the time the SNP formed a government in 2007, this had reversed drastically, as shown in Figure 1 above.
The Scottish Government seems coy about this and the massive social stresses it causes. Their housing statistics cheerfully cite the number of new builds, without emphasising the paucity of affordable social housing involved. The fact that the half of Scots who once enjoyed low-cost council housing are now chasing a narrow 12% segment of council homes, plus a more expensive 11% segment of RSL homes does not seem to have galvanised any of the three earlier Housing Ministers (Alex Neil, Keith Brown and Margaret Burgess) into decisive action.
The crucial element in council housing they seem to have ignored is its offer of long-term security. Such security allows for continuity of education, health facilities and social structure. All these are being eroded by the current policies that provide a paucity of secure affordable rental stock. This creates huge social problems and a further drain on Government finances. The result is a steady increase in homelessness and an even more acute situation of people in temporary accommodation. These latter may not be sleeping rough, but have no basis for a stable, let alone a fulfilling life. Recent worsening of the crisis is highlighted in Figure 3 below. (Source: Scottish Government)
Figure 3: People in Temporary Accommodation in Scotland, 2014-2022
The surge shown in Figure 3 happened during the unfortunate seven-year hiatus when Nicola did not see the need for a dedicated Housing Minister to address this worsening crisis. Humza Yousaf resurrected the post by appointing Paul McLennan last month.
Though new as a minister, Paul has been steeped in this crisis, as his East Lothian constituency is in the van of growth in Scotland, so that affordable homes are like hen’s teeth. This results in an ELC waiting list if over 4,000 applicants. Pressures from being commuter-land for Edinburgh are compounded by serious numbers of second homes and Air B&B-style holiday lets, forcing scant private rentals towards Edinburgh prices.
Provision of affordable homes was compromised by East Lothian Council (ELC) building virtually no homes before 2008, relying on local RSLs EL Housing Assoc. and Homes for Life to provide. They failed, achieving only 4.7% of housing in the county—well under half the RSL national average of 11%. And ELC are not above fudging the figures. They are proud the number of people needing temporary accommodation has dropped by 20% from its 2011 peak of 1,137. However, since average days spent IN that accommodation has almost doubled (from 199 to 377), that’s actually a net 72% increase in demand.
At the same time, ELC’s original stock of over 16,000 homes in 1981 has halved to 8,740.. They were also slow in enforcing a planning requirement that developments of four or more homes must provide 25% of them as affordable. This has been undercut by elastic interpretation, with many going to RSLs, to rent-to-buy schemes and even to “affordable” purchase. This has left only 5-10 in each hundred being truly affordable council homes to rent, almost all of which go to “vulnerable” people and those stuck in temporary accommodation.
“When you’re up to your ass in alligators, it’s hard to remember the plan was to drain the swamp.”
Paul could make a name for himself in his home turf by incentivising ELC to get serious about rebuilding their stock and stop relying on crumbs from developers’ tables. Better yet, he could put his head together with Tom Arthur, Minister for Planning, and come up with a scheme for planning communities, rather than the 21st century bland equivalents of Castlemilk or Wester Hailes, now growing like boils on small towns. That would do much to heal social fragmentation blighting Scotland and thus render the “progressive” policies this government favours largely redundant.
Does Paul want to leave a legacy, or become just another revolving-door minister?