Blog: If the housing need is to be met, priorities have to be set
Bryan Finlayson outlines the consensus seen in Holyrood, that social housing has a large role to play in lifting Scotland out of the housing “crisis”.
One thing that was absolutely clear from the run up to the 2016 Holyrood election is that social and affordable housing continues to be an important issue Scotland has to grapple with. Each of the main parties created significant noise about the housing “crisis” and how they would seek to address these concerns. One thing, however, that was consistent, was the acknowledgement of the important role social housing has to play in that process.
There is no need for us to go back over the post 2008 crash in any detail, but it is clear that the volume of private housebuilding in Scotland fell off a cliff. While social housing picked up a degree of the slack, this has tailed off somewhat over the last few years. However, what is also forthcoming, is that the benefits from concentrating on increasing affordable housing suggest we should be pressing ahead on that front as quickly as we can.
Shelter Scotland were clear on the benefits in their policy paper The Economic impact of investment in Affordable Housing, which they published at the end of last year. And when you drill into it, their position looks sound. It has long been recognised that the economic benefits from investment in affordable housing are wide and varied, and are felt broadly across society, by both the individual – through having a secure, energy efficient, affordable home – and by those employed directly in the house building industry all the way through to the government itself as it may reduce the housing benefit bill over the long-term and facilitate other health and social justice outcomes.
If the demand for new homes is not met, the most obvious outcome will be an increase in house prices and as a result the number of people who want to step onto the property ladder but can’t afford to do so will increase and the housing benefit bill will grow. Increased property prices must inevitably trickle down to private rents which, combined with low wages, increases individuals’ reliance on housing benefit. Ergo, increasing the supply of affordable housing would not only benefit individuals in need of more affordable housing but also result in a reduction of the required spending on housing benefit.
It is also recognised that the kind of extreme house price volatility that was felt in the teeth of the downturn is a massive risk to the Scottish economy, particularly when combined with a shortage of housing supply. Social housing projects certainly can play a role in moderating future house price bubbles and affordability pressures.
By increasing investment in social and affordable housing we are able to create long-lasting economic benefit for individuals and the government alike. Pressures on household budgets are reduced and some greater flexibility in the labour market should be felt. Housebuilding also has a stabilising effect on the whole housing market, reducing volatility and the risk of a damaging crash with far reaching consequences. It seems like all of the parties at Holyrood are in agreement that the Social Housing programme should be advanced – but the question is how to balance this clear aim with the other competing claims on the precious budget.
- Bryan Finlayson is head of Scottish real estate at Weightmans (Scotland) LLP