THE Scottish Government has announced an investment of £768 million in affordable housing which it said will see the build of more than 8,000 properties over the coming year.
The news was revealed by Scottish finance secretary Shona Robinson in the budget statement, with the cash set to deliver homes for social rent, mid-market rent, and low-cost home ownership.
Elsewhere in the budget, Robison revealed £300 million will be invested in upgrading heating and insulation, and investment in offshore wind will almost triple to £150 million.
Significantly for the construction sector, £1 billion has been pledged to deliver ‘efficient and resilient roads’, including money to complete the long-awaited A9 dualling, a project described as a ‘central priority’.
Over £237 million will be invested in maintaining and improving Scotland’s ports and harbours. Regeneration funding will be increased to £62 million to invest in communities across Scotland, while £25 million will support the energy transition.
The Scottish Government added that it still faces ‘significant’ pressures due to the level of high inflation experienced in the construction sector, which it said has ‘permanently increased the cost of delivering infrastructure’.
Responding to the budget statement, Places for People’s chief executive Greg Reed said the £768 million investment in affordable housing ‘turns a new page’ for Scotland, where a worsening crisis sees every 20th person awaiting a social home and where 10,000 children are stuck in temporary accommodation.
“The finance secretary’s injection into the Affordable Housing Supply Programme – reversing the devastating 2023 cuts to the budget – will pave the road to recovery for housing in Scotland and urgently kick-start the supply of 8,000 vital new affordable homes,” he added. “But while this funding is welcome, this is just the start. A long-term and strategic approach is the only way to truly end Scotland’s housing emergency, reduce homelessness and eradicate child poverty. We welcome the finance secretary’s pledge to look at all the levers available to her to achieve this.”
The Scottish and Northern Ireland Plumbing Employers’ Federation (SNIPEF) welcomed housing and green energy funding but called for action on apprenticeship and further education investment.
Fiona Hodgson, chief executive of SNIPEF, said, “The allocation of £768 million to deliver 8,000 low and middle-income homes is a positive step forward and will undoubtedly drive demand for plumbing and heating professionals. Likewise, the £300 million investment to improve heating and insulation as part of the effort to tackle fuel poverty, alongside £25 million for new green energy jobs, which we hope will include apprenticeships, demonstrates a commendable commitment to achieving Scotland’s climate goals.
“Our latest State of Trade survey reveals that 65% of plumbing and heating businesses are struggling to find skilled professionals in their area. Without investment in training and upskilling, the plumbing and heating profession cannot deliver the housing and green energy projects Scotland urgently needs. Heat pumps and other renewable technologies, for example, require a skilled workforce, and this cannot be achieved without meaningful investment in further education.”
SNIPEF also acknowledged measures to support small businesses, including continuing the Small Business Bonus Scheme and a freeze on property rates for business premises.
Behnam Afshar, director at AMA Homes, called the reintroduction of funding to Scotland’s affordable housing scheme a ‘promising step forward’, but warned that the government has not promised much else in the way of housing for Scotland. “Because of this, the UK-wide budget’s decisions on housing will undoubtably have an impact on us here,” he stated. “With increased borrowing following the Westminster budget, we can expect mortgage rates to rise.
“However, as the Bank of England has knocked interest rates back to 4.75%, this will hopefully do enough to ensure the housing market continues steadily, with reports suggesting a stronger year ahead in both volumes of sales and percentage increase prices. I am expecting to see greater market confidence in general in Scotland than in England. As a devolved nation, we rely less on the workings of Westminster politics to stimulate our housing market, and I am confident we will see more home movers in Scotland in 2025.
“While England has seen a change to both the stamp duty rates for first-time buyers and second homeowners, we are reassured here in Scotland that the LBTT rates and first-time buyer relief will stay the same until 2026. This provides some stability for those considering a purchase in 2025 and should add a confidence boost to the Scottish market.”
Kirsty Morrison, group CEO of Albyn Housing Society, said, “If we are to satisfy current housing need in the Highlands then there will need to be considerably more homes built. To keep up with future housing demand created by a successful Inverness and Cromarty Firth Green Freeport, it is estimated that we will need 24,000 homes over the next ten years.
“If we are to realise the benefits of this economic transformation then there will need to be a considerable increase in the number of affordable and private homes built in the area. The finance secretary’s restoration of the housing budget is a key part of unlocking current and future developments. This is especially important for rural areas like the Highlands where construction costs tend to be higher.”
Jim Baxter, financial director at Allanwater Homes, stated, “While I welcome the reversal in cuts to Scotland’s affordable housing budget, I believe the government could have done more to support housebuilders in Scotland. The budget could have been used to address other key challenges in the housing sector, including rising costs and supply chain disruptions. Unfortunately, the Scottish Government followed Westminster’s lead, improving minimum wages and pensions but without incentivising employers to expand workforces, and with little incentive to meet the current housing shortfall.
“However, homeownership is still an important aspiration in Scotland, and there must be support made available to first time buyers too. I would like to see the Scottish Government look to reintroduce financial support for home buyers, such as reintroducing Help to Buy or Shared Equity schemes, in order to make homeownership accessible once again for a new generation of first time buyers.
“However, there is also significant pressure on SME housebuilders to deliver. Regulatory reforms are urgently needed to address the housing pipeline, including streamlined planning permissions for residential development to enable quicker project launches and reduce delays. Equally, greater flexibility in zoning would allocate more land for residential projects, particularly in high-demand areas.
“I would also like to see the Scottish Government take a closer look at our supply chains, and support the local production of construction materials to reduce dependence on imports, and then stabilising costs to make this achievable.”
Michael Pratt, director at Timber Engineering & Invertay Homes, commented, “Housebuilders desperately need the Scottish Government to do more to help SMEs with the broken system for financing new-build developments. Traditional forms of lending for development finance have become too restrictive and onerous for most SME’s to obtain.
“With land acquisition, planning, developer contributions and regulatory requirements now swallowing up so much equity at the front-end of every development it is very difficult to make the numbers stack up for ‘traditional lenders’. Coupled with the high level of construction industry insolvencies over the last four years, lenders are becoming very risk averse meaning developers need to commit more of their own money for longer with smaller returns. It is fast approaching a point where the ‘juice isn’t worth the squeeze’ particularly given many developers have to provide personal guarantees to secure lending. While that money is tied up it can’t be deployed on other developments.
“Scotland is in the middle of a housing emergency. While it’s an encouraging move to see the Government recommit to funding affordable housing, we simply don’t have enough homes for the growing needs of the country – and yet new housing is at its lowest output since 2009 which can be largely attributed to the reduction on the number of SME housebuilders. The Scottish Government needs to do everything it can to help SMEs grow their output and we would strongly endorse a similar Government Guaranteed scheme such as what has been proposed for England and Wales last week. It is not a silver bullet but a Scottish ‘Help to Build’ initiative could lay the foundations for a much-needed resurgence in house building in Scotland.”
Susan Jackson, joint MD at Campion Homes, said, “The cut to funding for affordable homes last year definitely had a significant negative impact on several social housing projects. Ultimately, this has led to delays in families being able to move into the homes they need. With several Councils and the Scottish Government both declaring housing emergencies, clearly this needed to be addressed. That is why it is really positive to see this budget cut reversed. Significant barriers to more homes, both private and social, still remain, but this is a good step towards recovering the shortfall of 110,000 homes in Scotland since 2007.”
