While housing is a devolved matter, ESPC hopes that the promises made by Labour in the recent general election might help to bring about changes in policy in Scotland too.

For example, Labour’s manifesto spoke of building 1.5 million new homes in England over the next parliament, and housebuilding commitments have already been announced by the new Chancellor. For comparison, in 2021 the Scottish Government set out a target to deliver 110,000 affordable homes by 2032.

At a time when a housing emergency has been declared in Scotland, the topic merits renewed focus and joined-up thinking, and it’s encouraging to hear First Minister John Swinney saying that “there is common ground to be achieved by working collaboratively with the United Kingdom government” after his first meeting with the new Prime Minister Sir Keir Starmer.

Over the past few months, ESPC has had the privilege of meeting with Members of the Scottish Parliament from across the political parties, to discuss the challenges of the housing market and the concerns we have about aspects of current policy.

In my opinion, supply of housing is the fundamental issue underpinning most of the other problems we face, and there is a particular lack of housing stock in the areas that people most want to live in. In east central Scotland, for example, we have a distinct lack of affordable new-build homes, rental properties are in extremely high demand and there’s just not enough stock to satisfy that demand.

Thought should be given to how more properties can be provided, and I would hope to see the government use real creativity to come up with effective solutions. Perhaps the government could build its own properties, filling the gap created when the Rent to Buy initiative was introduced in the 1980s? Could the Scottish Government set up a fund to acquire and/or build properties, with people investing in the fund for an annual return?

Renting

The Scottish rental sector has been a particular cause for concern recently. We’ve seen massive increases in rental rates across the country, including the period when rent controls were introduced. Why? Many landlord have been unable to bridge the hap between the frozen rental rate offered to their tenants and the rising mortgages rates they themselves faced, leaving them no option but to sell properties on and exit the rental sector entirely. That has created a cycle of a lack of available stock, heightened demand and increasing rental rates, particularly in those areas which were already popular.

ESPC Lettings has seen a 20% reduction in the number of its landlords over the last 12 months, and we are not alone in this – the Scottish Association of Landlords estimates that 22,000 landlords have left the market in recent times.

We need these landlords to come back, and I believe that the time has come to revisit the Additional Dwelling Supplement. The current 6% rate is almost certainly a barrier to purchasing property for most and is undoubtedly discouraging prospective landlords from purchasing a buy-to-let property. It’s my belief that this should be reexamined and brought more in line with the English market (where 3% Stamp Duty is paid on second homes, including buy-to-let properties), or perhaps a more nuanced system could be created, whereby buy-to-let properties are exempt from the Additional Dwelling Supplement.

Buying

It’s not just the rental market where challenges arise; the property market is no doubt often a tricky ladder to climb, especially for first-time buyers in today’s economic climate. The issue that jumps out to me, particularly when discussing the purchase of property in a more expensive city like Edinburgh, is that LBTT is a barrier to purchase.

The current relief for first-time buyers, which applies to properties up to £175,000, is little relief at all for those buying a home in Edinburgh, where the average first property purchase comes in at £255,612. By contrast, first-time buyers in England can enjoy tax relief up to the purchase price of £425,000 – this means that a Scottish first-time buyer would pay £1,780 LBTT while a buyer in England purchasing a property of equivalent value would pay no Stamp Duty at all.

As we all know, £1,780 is a sum of money that could make a huge difference to a buyer starting out, and the inequality between us and our neighbours seems especially unfair for those at this crucial stage of the property journey.

We’d also like to see the return of government support for first-time buyers. Every scheme previously introduced by the Scottish Government has been hugely oversubscribed (see the First Home Fund, last introduced in April 2021, where a year’s worth of funding was allocated in just eight days, with the Fund remaining closed ever since). It is clear that there is huge demand for this kind of support, whether that be in the form of grants, or looking more towards a widespread shared equity scheme, to assist more aspiring buyers.

With the public purse stretched ever thinner, perhaps private equity might hold the answer in getting such a scheme off the ground – or perhaps there may be a way for local government pension funds to be used to fund the scheme, with returns being the interest on the loan, and the increase in the value of the asset itself.

It’s important to remember that homeownership is a cycle more than it is a ladder – by that I mean, we need new buyers to be coming into the market all the time, otherwise who will there be to buy homes? If we make it unachievable for new buyers to take that leap, it has a knock-on effect on the whole market. Everybody who wants to own a property deserves the chance to make that a reality, and we can’t afford to let homeownership slip away from the younger generation – it matters to all of us.

It will be interesting to watch the actions of the Labour party, now that they are firmly in charge. Their decisions will have funding consequences for Scotland through the Barnett Formula, of course, but we also hope that any big announcements on housing and housebuilding in England will also make those issues a greater focus here in Scotland.