Sun to shine on housebuilding sector at Homes for Scotland Annual Lunch

I am really looking forward to the Homes for Scotland Annual Lunch and Awards on Friday.  Not just because the glorious weather this week has put everyone in an upbeat mood, or indeed that Burness Paull sponsors the event, but due to the fact that it’s a great opportunity to catch up with people at what, for me, is the highlight of the year in the housebuilding calendar.

The Annual Lunch is timed perfectly – landing right at the end of New Homes Week this year – an initiative designed to promote the benefits of buying a new home to potential buyers. New Homes Week brings into focus some of the great work that the housebuilding industry does and provides an opportunity for potential buyers to find out more about the huge benefits that buying a new build home, compared to a pre-owned home, gives them.  Principally, this relates to peace of mind for buyers - particularly the warranty and insurance cover that all new homes benefit from.

The Lunch is an enormous event with over 1,000 attendees. A glance at the guest list shows that it covers all aspects of the industry: including housebuilders, contractors, suppliers and professionals. It’s clear to see from the guest list alone just how the housebuilding industry underpins a large section of the Scottish economy.

The dedicated Homes for Scotland team do a fantastic job each year in creating an event that’s even better than the one before – no mean feat. The Awards showcase the best the industry has to offer and it is always impressive to see the contenders’ developments.

There is a huge amount of deal activity going on at the moment and we see no let up in terms of housebuilders’ appetite for new sites.  The supply of developable land is becoming ever tighter and, whilst the hope was that the new planning system would help relieve this, the current status of the Planning Bill illustrates that we are going to be heavily reliant on MSPs sorting out the many issues it presents in the short term.

What is of equal concern is the apparent “flat-line” in new home delivery.  The latest housing statistics show just a 4% increase in housing completions in Scotland for the year to end September 2018 against the previous 12 month period.  This masks a 3% drop in new homes being completed in the private sector.  We are still a good deal short of the 25,000 new homes needed each year in Scotland.

What else can be done to address this? The high cost of infrastructure required to support the creation of new developments is often a high hurdle that developers face. It is great to see the Infrastructure Commission for Scotland being created, and Ken Gillespie, the Homes for Scotland Chair, being appointed as one of the ten commissioners.  Having a more strategic approach to delivery and creation of infrastructure across Scotland must only be a good thing - provided it is done right.

Of particular interest to me is how large-scale infrastructure projects are funded.  This needs to be done in a way that balances the interests of all the parties, from existing communities through to developers - some of whom are simply ruled out of opportunities from a cashflow perspective as a result of the up-front costs. The cash requirements for major infrastructure investment before a new home is sold, let alone built, has necessarily led to the trend for large-scale settlements to allow developers to spread the costs of delivery across more homes.

Given that we are still below the target of 25,000 new homes per annum, having a joined-up approach country-wide to long term sustainable infrastructure delivery has to be a key factor in ensuring that this target is met.

Hopefully, everyone hosting a table at this year’s Annual Lunch and Awards has now got their drinks orders in (the deadline was last Friday).  The drinks order no doubt helps, but there is never a lack of good cheer at the event.  That positive, can-do attitude runs through the housebuilding industry and hopefully initiatives such as the creation of the Infrastructure Commission for Scotland can similarly adopt that positive, engaging and can-do approach.