It is no surprise that Edinburgh Council and, most recently, Glasgow Council have declared housing emergencies. The shortage of homes extends beyond Edinburgh and Glasgow, with slowing supply and increasing demand across the residential, care and student accommodation sectors pricing much of the population out of the major cities. Indeed, the Scottish Parliament just recently debated making the housing emergency a nationwide issue – whilst Parliament voted against making this declaration, it is clear that pressure is building.

For instance, BTR is scarcely off the ground in Scotland and just not happening because of the “unintended consequence” of Scottish Government rental controls. Clearly, strategic direction for government support is needed. With government support still up in the air, what can be done on the ground to find quick, effective solutions to an urgent need? Despite facing political and economic challenges, SME property developers might just have the flexibility and local insight to offer a solution to Scotland’s housing woes.

The importance of regeneration

Due to the scarcity of land in densely populated cities such as Edinburgh and Glasgow, conversion and regeneration is vital to bolster the residential housing supply. SME developers are particularly well placed to take on these types of sites, but are dependent on the right political and financial backing. Atelier found at its recent Lending Update event in Edinburgh that there is a willingness to take a strategic approach to developments that align with local needs. As expected, it is about securing the right product in the right location.

Cities with more brownfield potential, such as Glasgow, have seen a more rapid development in affordable housing through regeneration projects. In more densely populated cities, redevelopment and regeneration projects will take other forms such as vacant industrial sites, which could be used to aid the housing crisis. However, SME developers require a larger choice of flexible financing solutions to begin these developments and tackle Scotland’s housing crisis.

Less volatility for Scotland

Scotland’s housing woes also need to be taken into a wider context of the rest of the UK. For instance, the latest Zoopla house price index has reinforced Scotland’s position as a less volatile market when compared to the rest of the UK. According to the latest data, the average UK house price has fallen 1.2% in the last 12 months. Scotland, however, was amongst the least impacted with the average house price now +1% higher than a year ago. The smaller peaks and troughs faced by Scotland’s housing market suggest it has the potential to be more robust economically but, must rapidly combat its lack of supply if it is to avert the housing crisis.

The picture for PBSA

One area of the market where the supply-demand gap is perhaps most apparent, but where opportunities exist for developers, is the purpose-built student accommodation (PBSA) market. With 15 universities in Scotland, affordable student housing is more in demand than ever – particularly in Scotland’s main cities where students have been warned not to enrol on courses due to a lack of housing. PBSA developers are facing a number of planning obstacles, preventing essential development to meet demand. The most recent example of this is the dispute over plans for an 11-storey student accommodation block in Glasgow’s Trongate Area, which has been rejected by Merchant City and Trongate Community Council for looking more like an ‘industrial production unit than a residential neighbourhood’.

Brownfield sites and regeneration or conversion schemes perhaps hold the most potential for Scotland in the face of a dearth of new land for development. It is vital we give these developers the necessary support to deliver on residential demand. Ultimately, despite the ongoing economic uncertainty, now is the time to act if we are to address Scotland’s housing shortage before the crisis escalates.