Developer incentives will be critical if Scotland is to meet ambitious housebuilding targets set out ahead of the upcoming election according to RSM UK.
Political parties have outlined plans to deliver between 15,000 and 30,000 new homes per year, significantly above historic delivery levels.
However, industry data suggests the sector faces persistent barriers that could limit progress without additional support.
RSM UK’s latest Real Estate 360 report found that 39% of respondents cited rising development costs as the biggest obstacle to meeting housing targets, while 26% pointed to planning challenges.
VIABILITY CONCERNS
Proposed planning reforms could help accelerate approvals, but the firm said this alone would not be enough to unlock delivery at scale.
Viability pressures remain a key concern, with developers facing uncertainty around material costs, labour shortages and increased regulatory and tax burdens.
These challenges are compounded by weaker consumer confidence, flat house price growth and higher mortgage costs, all of which are impacting project feasibility and working capital.
The data suggests that without targeted incentives, developers may remain cautious about committing to new schemes.
Labour shortages also continue to weigh on the sector, with an ageing workforce and ongoing difficulties attracting new entrants.
While increased funding for apprenticeships has been proposed across political parties, including a focus on construction, this is expected to support delivery only over the longer term.
BIG BARRIERS
Jennifer Lewis (main picture, inset), senior analyst for real estate and construction at RSM UK, says: “Most parties have shown a shared ambition to build a significant number of new homes, with targets varying from 15,000 to 30,000 a year.
“This would undoubtably offer a positive boost for the sector. However, numerous factors and persistent challenges need to be addressed if these targets are to be met.
“Our latest Real Estate 360 report found that over a third of respondents (39%) cited increasing cost of development as the biggest barrier to meeting the UK-wide government housing target, with 26% noting planning challenges as the largest barrier.
“Most parties have announced plans to reform planning processes to expedite approvals, although via varying methods, which could help to address some of these issues.
“However, while these measures would allow building work to commence, there also needs to be a focus on incentivising developers to take on these projects.”
MORE SUPPORT
She adds: “Uncertainty around material prices, a shortage of skilled labour and increasing pressure from governmental regulation and tax issues coupled with low consumer confidence, flat house prices and rising mortgage costs all have a significant impact on working capital management, and are meaning many developments are becoming less viable.
“Further support from the new government for house builders to alleviate these pressures may therefore be needed to ensure projects are viable and completed as planned.
“Many of the proposed house building targets reflect an increase from what has been achieved in the last ten years, with an average of 18,000 to 20,000 new homes completed each year since 2016.
“The challenge will be in securing the manpower.”
“The challenge will be in securing the manpower to deliver this ambitious target, with an ageing workforce and a continued challenge around attraction to the industry.
“All parties have promised more funding for apprenticeships, with some focusing on construction, which could help with skilled labour availability in the long-term, and therefore help to boost housebuilding activity.”
