Red Tape and Rising Costs Hinder SME Home Builders in Scotland

Strategic Insights -

The Scottish Government's policies have made it increasingly harder for small and medium-sized (SME) home builders to deliver new homes in Scotland. A survey by Homes for Scotland (HFS) found that 88% of its SME members are concerned about workforce capacity, while 96% said slow planning decisions are blocking progress. The sector body's report highlights the need for government-backed funding solutions to increase the development of private and affordable homes by SMEs.

Key Takeaways:

  • 88% of SME home builders in Scotland are concerned about workforce capacity, putting pressure on the housing pipeline.
  • 96% of SME home builders said slow planning decisions are blocking progress and stopping much-needed new homes from being delivered.
  • £20,000 of additional costs are incurred on developing every new home due to new regulations brought in since 2021.
  • SME home builders built 2,500 homes in 2024, including 1,075 for social rent, representing 12.6% of the 19,797 homes delivered in Scotland last year.
  • HFS recommends an overhaul of government regulation to reduce cost and complexity to make it easier for smaller businesses to build.
  • The Building Safety Levy, proposed by the Scottish Government, would disproportionately affect SMEs.
  • A lack of construction skills is a major headache for home builders, with 88% of SMEs concerned about workforce capacity.

Statistics:

  • 2,500 homes were built by SME home builders in Scotland in 2024, including 1,075 for social rent.
  • 19,797 homes were delivered in Scotland last year, with SME home builders contributing 12.6% of the total.
  • £20,000 of additional costs are incurred on developing every new home due to new regulations brought in since 2021.
  • 96% of SME home builders said that slow planning decisions are blocking progress.
  • 1800 private homes in Scotland were sold by SME home builders last year, despite a 6 per cent reduction in the number of SMEs on the previous year.
  • 125 SMEs were operational in Scotland last year.

Sources:

  • Homes for Scotland (2024) - Report on SME Home Builders in Scotland.
  • The Scottish Government - Building Safety Levy proposal.
  • VELUX - Report on the reduction in SME home builder activity.