A new report has revealed that the number of small and medium size (SME) housebuilders in Scotland has fallen to its lowest level in 20 years.
Amid a housing emergency, red tape and rising costs have been highlighted as key issues, with nearly 9 in 10 survey respondents saying government policies are making it harder for them to build.
The insights are provided by SME members of sector body Homes for Scotland (HFS). Respondents claim new regulations brought in since 2021 are responsible for in excess of £20,000 of additional costs on developing every new home, increasing already constrained housing affordability.
Planning holdups are also problematic – with 96% of SME builders reporting that slow planning decisions are blocking progress.
Fionna Kell, HFS director of policy, said, “Our small and medium home builders are facing a barrage of costs and delays that make it increasingly harder for them to deliver the range of homes that Scotland needs and to grow their businesses sustainably. Without a thriving SME home building sector, many sites in rural and town centre locations, or those on smaller or tricker pieces of brownfield land which require additional remediation, would just never be built.
“With national planning policy prioritising the development of brownfield sites in Scotland we need to see government-backed funding solutions to increase the development of private and affordable homes by SMEs who face disproportionate infrastructure costs.”
HFS is recommending an overhaul of government regulation to reduce cost and complexity. Specifically, it is asking that SMEs will not be subject to the Building Safety Levy, a new tax proposed by the Scottish Government on new homes. It also says planning must be streamlined, reflecting the recent reforms proposed by the UK Government.
Fife-based Campion Homes said is vital smaller builders get support. Joint MD Susan Jackson commented, “Builders like us can deliver projects in our local communities providing training and jobs whilst also supporting and boosting the local economy. We also provide diversity in the market offering more house types, layouts and price points that are more responsive to customer needs.”
HFS also spotlighted a lack of construction skills, with 88% of SMEs concerned about workforce capacity.
Fionna added, “Our members are committed to growing the sector and offering the wide array of socio-economic benefits SMEs bring to local communities. However, they require bold interventionist support, delivered at pace from both national and local government if we are to fully realise this potential.”
HFS added that SMEs struggle to access the finance and funding they need to deliver projects. The trade body is keen to see funding schemes, like the Housing Infrastructure Fund, adapted to make it easier to access.
Susan added, “There is a real opportunity for the new cabinet secretary for housing to make a huge difference to the sector, especially those SME builders that deliver homes up and down Scotland. We are desperate to play our part in delivering the homes that Scotland needs. We just need the government to help us unleash this potential.”
The report was developed in partnership with VELUX. Trevor Smith, the company’s national housing development manager, said, “VELUX and the wider supply chain is all too aware the alarming reduction in SME home builder activity and therefore delighted to be supporting this crucial initiative which provides an important update on the footprint of this vital sector.”
