'Aspirational' report on future of Scottish housing highlights existing policy weaknesses, says expert

Out-Law News | 05 Aug 2014 | 12:59 pm | 3 min. read

The amount of development land going through the Scottish planning system should be doubled by 2016 as part of a package of measures to increase the country's "inadequate and elastic" supply of housing, according to an industry report.

The Scottish Housing Commission, established late last year by the Royal Institute of Chartered Surveyors (RICS), has concluded that there is no "simple, single factor" that could reverse housing supply problems in Scotland. However, it has made 15 recommendations covering development, planning, management and taxation (40-page / 2.3MB PDF) that could "make a fundamental difference in how we tackle Scotland's housing crisis" if implemented.

Planning law expert Gary McGovern of Pinsent Masons, the law firm behind Out-Law.com, said that although some of the group's recommendations were "rather aspirational", its report was a timely and useful contribution.

"Much of the immediate attention will be on headline-grabbing elements such as a suggested need to deliver between six and eight 'major new communities', which seems destined to lead to the usual debate around greenfield versus brownfield land," he said. "Hopefully we can get to move past that as a number of the other recommendations merit serious consideration."

"The report suggests there is a growing consensus around the notion of establishing a new, central 'land delivery' agency, to help tackle issues relating to the availability of land at affordable levels and site assembly where land is in multiple ownership. This sort of central agency has been recommended by various bodies over the last three or four years, most recently by the Land Reform Review Group in May. Presumably the hope is that its singular focus, strategic position and, potentially, an ability to lever in additional funding would enable it to intervene more effectively in this area than local authorities," he said.

Chaired by Tom Barclay, the immediate past chair of RICS Scotland, the RICS Scottish Housing Commission based its recommendations on submissions from the property profession, not-for-profit housing sector, investors, developers and others. Its recommendations ranged from elevating the Scottish government's current post of housing minister to a cabinet secretary position, a reduction to 5% in the rate of VAT levied on refurbishment and maintenance building works and a Scottish government review of the existing planning consents regime.

The group recommended the creation of a Scottish Housing Observatory advisory group and Scottish Land Delivery Agency (SDLA), the second of which should be given similar powers to those currently available to local authorities such as compulsory purchase. It also recommended that the Scottish Housing Regulator be given a greater role over system performance, knowledge and change. Among its recommendations for the Scottish government the group called for measures to "enable the delivery of six to eight major new communities", either as new towns or parts of existing settlements; a central role for the private rental housing market; and the creation of a new planning skills programme.

McGovern said that the group's proposed SDLA was similar in scope to the Housing Land Corporation recommended in May by the Land Reform Review Group, a group of property law experts and academics commissioned by the Scottish government to consider ways to strengthen the relationship between communities and land ownership. Both bodies as envisaged would be given compulsory purchase powers to acquire and develop land for housebuilding and, in the case of the RICS report, have a role in delivering a suggested 100% uplift in land for development.

"The development industry would obviously support the suggested aim of delivering a 100% increase in effective supply of land for development by 2016, and related recommendation that all local authorities be able to demonstrate a 10-year effective land supply as standard," said McGovern. "The report does not adequately explain how it might be achieved in practice. It envisages a role for the new 'land delivery' agency in this context but it is difficult to see how that could be set up in time to meaningfully contribute before 2016."

"The report is also timely as it sets the 'land banking' issue in proper context, noting that land cannot be held 'speculatively' – with consent – for long periods unless with the approval of the planning authority. This is an important clarification following on from the Land Reform Review Group report, which suggested that there is a considerable amount of land-banking and speculation by volume housebuilders in the private sector and identified this as a problem which needed to be tackled, for instance through new 'use it or lose it' mechanisms," he said.

McGovern said that the report was also welcome because of the way it drew attention to "some important practical defects in the existing policy frameworks"; for example the lack of any definition around what constitutes 'effective' land and what concepts like 'marketability' and 'deliverability' really mean in planning terms.

"In our response to the Scottish government consultation on the new Scottish planning policy last summer, we at Pinsent Masons made similar observations - but the Scottish government has, so far, chosen not to grasp this nettle," he said.

"In a similar vein, it will be interesting to see if and how the government responds to the commission's observation that its new Housing Need and Demand Assessment framework, only just adopted, is unlikely to enable planners to identify a sufficiently generous land supply to meet both the existing and emerging need for housing in Scotland," he said.