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CHAPTER TWO: OUR PRIORITIES FOR ACTION ON HOUSING SUPPLY

As a Government we will set a national political context which is strongly supportive of house building. As part of this we propose to set a national aspirational goal for a significant expansion in housing supply.

Increased housing supply must be delivered on the basis of higher environmental and design standards that create sustainable homes in places where people wish to live and work. While new house building which promotes sustainable communities will usually be within and around existing settlements, Scotland's pressing housing supply needs are such that it is also time to encourage much expanded or new, stand-alone settlements in the right locations.

Since action will be needed at all levels of government to deliver these aspirations, we will establish a new relationship with local government and other partners. We will also look to local authorities to work closely with their neighbouring authorities and their partners to establish regional targets for housing supply and to develop the local and regional housing strategy, planning and delivery framework.

Boosting housing supply

Chart 4 shows that the house-building rate in Scotland has been relatively steady at around 25,000 a year for the whole of this decade, with no significant response to increased demand. House prices were 72% higher in 2006 than in 2002, but the level of new build increased by only 2% over the same period.

We believe that the rate of new house-building can, and must, increase if Scotland's housing needs are to be met. We are already taking action to improve the responsiveness of housing supply to house price growth. This includes action to unblock developments in the pipeline through the Housing Supply Task Force and other initiatives described in this chapter.

Source: Scottish Government, Communities Analytical Services, Housing Statistics

Step change improvements will take longer to achieve. In the Scottish Housing Market Review we presented our initial analysis demonstrating the improvements in affordability in the medium term that could be generated by increasing the supply of new housing. We are now commissioning an economic model of the housing market that will allow us to strengthen our forecasts of
future affordability.

On the basis of our current analysis, we believe that increasing the rate of new supply to at least 35,000 per year by the middle of the next decade is both achievable and necessary if we are to reverse declining affordability. At 10,000 more houses per year, that would raise house-building in Scotland to levels not seen since the mid 1970s and put the per-capita rate of building far ahead of that for which the UK Government is aiming in England.

What is most critical, of course, is not just the stated ambition at national level, but that enough houses are built of the right type and in the right places. Therefore we will support local authorities to co-operate regionally in the setting of realistic housing targets through their local housing strategies.

We also recognise the need to avoid unmanaged, unplanned growth and to avoid the creation of housing estates which do not contribute to meeting our aim of sustainable mixed communities. We will expect plans for urban expansion in development plans to form part of long-term settlement strategies rather than approaching housing land release on a field by field basis. Proposals for the release of land currently designated as green belt can be considered as part of that wider approach, the aim of which is to provide clarity and certainty about the long term direction and scale of growth. Confidence in green belts can only be sustained against the background of a long-term settlement strategy.

The location of new housing development is critical, as is layout and design. We do not intend to repeat the mistakes of the past with large, single-tenure housing estates, poorly connected to jobs and services or dependent on the private car for those connections and designed in a way that does not foster a sense of identity or community.

Good design is about more than just architecture and the aesthetics of individual buildings. Some of our finest conservation areas are not necessarily defined by great individual buildings but by the spaces they enclose. The recent report by The Prince's Foundation provides a clear indication of the characteristics to which we should aspire to in order to create sustainable places. ⁴ These include the integration rather than separation of land use to provide opportunities for a range of work and lifestyle choices; mixed tenure and house types; and walkable neighbourhoods with well integrated and well managed open space.

The starting point for this approach is an understanding of context and place. We want to see the conservation areas of tomorrow, places of enduring quality which should reflect local traditions in their design and layout while embracing the challenges of higher energy efficiency. We believe that investing in quality will bring long term social, economic and environmental benefits - in short, sustainable and successful settlements.

Questions

1. Do you agree that aiming to increase the rate of new housing supply in Scotland to at least 35,000 a year by the middle of the next decade is a sensible and realistic ambition, and that this will help set a necessary political context for acceleration in housing supply?

2. Do you agree that, to give practical effect to the ambition, local authorities should co-operate regionally in setting realistic housing targets for housing market areas, and in enabling the delivery of these targets? If so, what arrangements should be put in place to support and provide incentives for such co-operation between relevant local authorities?

Higher environmental standards

Our proposals for a significant expansion of housing supply will, of course, be subject to a comprehensive strategic environmental assessment. It is vital they are delivered on the basis of much higher environmental and design standards than we have seen in the past. We will be building the housing and communities of the future - and we owe it to future generations to make sure these are sustainable.

The Prince's Foundation highlights the impact that the urban fabric and layout of places can have on environmental, social and economic sustainability - the three elements of what is termed 'sustainable urbanism'. That research has suggested that 'sustainable urbanism' can enhance development value and may even potentially enhance land value. ⁵

Scotland already leads the UK in the energy and accessibility standards set by building regulations and in the planning policy that asks for low and zero carbon equipment in new developments. It is also evident from chart 5 that carbon emissions from the Scottish housing stock are reducing. We need to go further to meet the challenge of climate change. Housing must play a major role in achieving our ambitious targets for reducing carbon dioxide emissions, given that housing is a significant user of energy and producer of emissions.

The Minister for Transport, Infrastructure and Climate Change has appointed energy specialists, designers, developers and others to form an Expert Panel to advise Ministers on a Low Carbon Building Standards Strategy for Scotland. One aim of that strategy is to move construction of new buildings, including housing, towards the rigorous energy performance levels imposed in Scandinavia, thereby allowing householders to reduce their energy use and carbon dioxide emissions, as well as their fuel bills.

Another objective is to provide a route map to the goal of zero-carbon buildings. Such a route map will show the future direction and stages for progressive enhancements to the energy standards in Scottish building regulations. This will offer the house building industry a degree of certainty that can support effective business and investment planning as progress is made towards zero-carbon homes.

Other new measures and incentives will contribute to increase the focus of housing funders, providers and consumers on the energy efficiency of new housing. From 2008, Energy Performance Certificates, which will provide important information on the carbon and energy emission characteristics of every new home on the market, will be provided to all homebuyers.

Our planning policies will help to create sustainable communities by promoting more environmentally sustainable transport, recycling previously developed land, better siting and design of new buildings, and by the continued development of renewable energy.

In order to deliver low or zero carbon homes, it will be necessary to increase the provision of micro-generation, alongside much better energy efficiency standards. Following consultation, our planning policies now require that all developments on larger sites incorporate zero and low-carbon equipment, contributing to carbon dioxide emission reductions over and above those achieved through building regulations.

Source: Scottish House Condition Survey

Homes for life

While action to tackle climate change is key, sustainability also requires homes that can accommodate the needs of an ageing and diverse population. The new Scottish building regulations include requirements that will make homes more accessible and cheaper to adapt in the future.

Strengthening the housing and planning delivery framework

For the longer term, high quality strategic planning for housing is crucial at all levels - national, regional and local. We will take action to further the integration of land-use planning and housing strategy through a strengthened national policy framework, including:

• new guidance for local authorities on the strategic assessment of housing need and markets to inform both Local Housing Strategies ( LHS) and development plans;
• further guidance setting out how local authorities should play a greater strategic role in shaping the housing system in their areas through their LHS in a way that is consistent with the move to a single outcome agreement between national and local government;
• the National Planning Framework, to be put in place next year, which will set the national spatial perspective for housing in the future;
• the revision by 2008 of Scottish Planning Policy 3 ( SPP3) which will strengthen national planning policy for housing to ensure the provision of sufficient land for housing and to support the creation of quality residential environments; and
• the outcome of a current review of planning agreements and their operation in facilitating housing development.

It is clear that if we are to make a step change in housing supply, it must be based on effective strategic planning. This means that housing and planning policies will need to be grounded in a robust and credible understanding of housing markets. They must also be effectively linked to the delivery of housing through planning of land supply, practical land assembly and investment.

The introduction of LHS following the Housing (Scotland) Act 2001, has been a lever for economic and social change, with an important shift of focus onto the working of housing markets. Moving forward, it will be important to ensure that the quantification in the LHS of overall housing requirements and, within that, of affordable housing need, is reflected both in land-use development plans and in the planning of affordable housing investment. The introduction this year of Strategic Housing Investment Plans, as part of the LHS, will sharpen the focus in this regard.

It is important to develop this approach still further. When people look for housing, particularly in the private sector, they do not all confine their searches to the immediate locality. House prices and rents may be more affordable in a neighbouring area.

For social housing, recent research suggests that cross-boundary Choice-Based Letting schemes in England have successfully increased the opportunities for, and the incidence of, moves across traditional administrative boundaries. ⁶ Except in some large rural local authority areas, the assessment of housing need - and the means of meeting it - should therefore take account of wider housing market areas and not just of the position within a particular local authority boundary. ⁷

The key element in this approach will still be the LHS, but a much stronger emphasis needs to be placed on collaboration across local authority boundaries to produce robust and credible housing need and market assessments. We will issue new guidance to local authorities to assist them to undertake such assessments in order to build a stronger and more strategic evidence base.

Working at this strategic level should enable local government to take a broader view of the options for meeting housing need and to specify requirements for the mix of affordable housing - including social housing, housing for mid-market rent and low cost home ownership - that is needed to create sustainable communities and support economic growth.

In some cases, development of a strategic approach to housing will necessitate working corporately within a single local authority and with partners to develop a robust understanding of need in an area and to identify a strategic approach to addressing housing supply and need. In most cases, however, it will mean working in partnership with two or more local authorities to devise a strategic solution to need across a wider area. This builds on current thinking and best practice in Scotland. ⁸

We will consider the need for expert support for local authorities in strategic planning for housing. This could take the form of a specialist national function to bring a long-term perspective on the operation of regional housing markets in Scotland, to influence both market and non-market sectors through the provision of strategic information on trends and requirements, and to provide advice to support local government in the drive to improve the functioning of housing markets.

Question

3. Is there a role for a specialist national function to provide expert support for local authorities in strategic planning for housing? What expertise do you think this function would require?

Accelerating land supply

Scottish Planning Policy 3: Planning for Housing ( SPP3) is under review with the aim of facilitating new land supply for development and making best use of existing allocations, especially in areas facing housing pressures. The review will consider ways in which the link between the assessment of housing demand and need and the planning and management processes can be strengthened and broadened.

There is a need for a more consistent approach to assessments of housing requirements based on a clear process and an improved methodology. The new guidance on undertaking strategic housing market assessments should help local government develop this consistency. There is also currently insufficient integration between local housing strategies and development plans. The review will seek to address this, as well as links with the community planning process.

The review will also provide greater clarity about the link between identified housing requirements and the release of land to meet them. In areas where there are particular pressures on housing supply, there is a need to encourage the quicker release of land for housing and the more effective use of existing housing land allocations. Importantly, the review will consider how a presumption could be introduced that will enable planning permission to be granted for developments in advance of land being designated in a development plan in circumstances where a demonstrable shortfall of housing exists.

Unblocking developments in the pipeline

We have established the Housing Supply Task Force with the specific purpose of tackling the impediments that are hampering the supply of all types of housing, including both market and affordable housing, in the short term as well as considering measures for the longer term. It is chaired by the Minister for Communities and Sport and is intended to drive change and innovation in housing delivery, to ensure coherence in planning and housing policy measures, and to support accelerated land supply balanced by improved design and environmental protection.

The Task Force has begun its work and will examine what is preventing the building of more homes in a number of areas across Scotland. In addition, it will examine a number of themes - including surplus public sector land, community engagement and infrastructure constraints - to ensure that action is taken where this can remove blockages that are preventing more homes being built where they are needed.

Enhancing the Government's strategic capacity

We have announced to Parliament our plans to follow through on our commitment to abolish Communities Scotland. We intend to bring directly into central Government many of the Agency's functions where they will be directly accountable to Ministers. This will enhance our strategic capacity to drive through many of the housing reforms outlined in this paper.

We will ensure that through the integration of these functions into Government, we add value to the support we are providing to the housing sector. But we are clear that success in implementing the improvements to the housing system set out in this paper will require effective joint working with, and respect for, the roles of other key partners, whether local authorities, the social housing sector, developers or lenders. Abolishing Communities Scotland will provide those partners with a single Governmental player that is committed to maintaining and developing close partnership working.

We have also confirmed to Parliament that following the abolition of Communities Scotland we will maintain a separate housing regulatory function. Our proposals for modernising the regulatory function are outlined at chapter 7.

We are planning to implement these changes to Communities Scotland by Spring 2008.

Question

4. Even when land has planning permission there are still blockages that prevent new housing being built. What additional arrangements would, or could, accelerate development on land with planning permissions to help ensure that future housing supply targets are met?

Housing in Rural Scotland

One issue which has already been identified by the Task Force as an early priority for consideration is the importance to the strength of our rural economy of appropriate, affordable housing and the particular housing difficulties facing many of our rural communities.

Rural Scotland has not been immune from the increased house prices seen elsewhere in Scotland. In remote areas, these price increases can have a magnified effect due to sparse supply in those locations. Lack of housing that is affordable may prevent local people from staying in their home communities and reduce the ability of local business to attract new employees. This can and does affect the growth, development and cohesion of rural communities.

As well as examining the hurdles that are preventing housing developments in rural Scotland through the Task Force process, we also want to engage further with those responsible for the delivery of housing in rural areas; whether they are in the public or private sector. We feel that more can and needs to be done to assist delivery, to encourage innovation and to address the obstacles that currently exist. There are lessons to be learned from the good practice that is being promoted elsewhere; not least by the Prince of Wales's Affordable Rural Housing Initiative which is active in its pursuit of balanced, sustainable rural communities. ⁹ Over the last three years, the Prince's Foundation Initiative has identified many illustrative examples where the private sector has played an important role in the delivery of affordable rural housing, and it has used these examples to raise awareness and motivate others to get involved in similar ways.

New settlements

For sustainability and economic reasons, new house-building should be within and around existing towns, cities and villages wherever possible, making best use of brownfield sites and existing infrastructure and thus minimising the need for commuting. But Scotland's housing supply needs are such that expanded or new, stand-alone settlements may well be a part of the solution in some areas.

Where new settlements are part of the solution, they provide an opportunity to effect a step change in the quality and environmental standards of new communities, both within and outwith existing settlements. Housing can be developed for a range of tenures with decentralised heat and power and high energy efficiency standards and located so as to make optimum use of public transport and provide opportunities for walking and cycling. Design and build should reflect the best architectural and design traditions of Scottish towns and villages.

We invite views on the role of a Scottish Sustainable Communities Initiative to encourage local authorities and their partners to bring forward proposals for such communities in their responses to the consultative draft of the National Planning Framework. Proposals should serve as exemplars of 21st-century low-impact development and reflect the principles set out in our policy statement, Designing Places. ¹⁰ The criteria we will use in selecting the successful proposals include:

• their contribution to meeting regional housing and economic needs;
• high environmental and design standards;
• commitment to building a sense of community and environmental wellbeing;
• provision for walking and cycling and effective use of public transport and information technology infrastructure;
• innovative use of renewable and clean energy technologies; and
• effective reuse of brownfield land.
• Further details will be set out in a document accompanying the consultative draft of the National Planning Framework.

Question

5. We have proposed that much expanded or new, stand-alone settlements may be a valid solution. How should we best encourage the development of new, sustainable communities that are sympathetic to Scotland's landscape and environment?

Public sector land

The Housing Supply Task Force has identified surplus public sector land as another priority for early examination to assess whether this potential resource is being used as effectively for housing development as it could be. We have initiated a review of the Scottish Government's estate which will examine the potential there. The next stage will be to examine the scope for further releases of surplus land held by local government and other public agencies.

Local government has a key role to play in this context. We will work with local authorities to secure solutions that are in the interest of both local communities and national needs. The Disposal of Land by Local Authorities Regulations that we have been consulting upon revise the consent regime that applies to the disposal of land at less than market value. This will allow councils to make such disposals where these will contribute to the wellbeing of the area, or will offer significant community benefits.

Alongside the role for local authorities, we believe that there could be a role for central government in the acquisition and assembly of land for development, as a pro-active response to the problems of housing supply - for example to support delivery of new development under the Scottish Sustainable Communities Initiative.

The purpose of such a role would be to deliver developments with a more balanced mix of housing in pressured markets, through master-planning, control of the pace of development on sites, cross-subsidy of affordable homes from private housing, and better use of available surplus public sector land. We see the development of such a national land role as one of the tools in a range of approaches designed to produce more houses, more quickly.

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