What will 2024 have in store for Scottish housing?

We ended 2023 with a devastating headline for the sector. We all wanted to see the Scottish budget provide a step change in investment that would help address the climate emergency, cut poverty and catalyse economic growth, as well as keeping us on track to deliver 110,000 social and affordable homes by 2032. Instead, we received a cash term cut of around £200m, undermining our social housing supply programme and plans to end homelessness. A 37 per cent real terms cut in the budget over two years.

The reality is that this funding cut puts a pause on almost everything. Local authorities will likely now re-assess their recently approved strategic housing investment plans to ensure they are viable and registered social landlords (RSLs) will be considering their development plans.

The truth is this could hardly have come at a worse time. The Scottish Housing Regulator had already recorded both an increase in the number of RSLs reporting deficits and a slowdown in development activity. But given the political involvement in rent setting last year now being met with reduced investment in the sector, we can expect that number to rise. These political decisions are limiting income generation and increasing costs, ultimately exacerbating the financial distress faced by social landlords.

We now need leadership from Scottish Government, honesty about the viability of its 110,000 affordable homes by 2032 target and we need to work with the sector on new funding models, economies of scale, and how we break the link between housing and wealth to stop exacerbating our housing crisis.

We have also been promised a Housing Bill in 2024, a Bill that will introduce a new duty for all social landlords to introduce a domestic abuse policy, create a new homelessness prevention duty, introduce greater rights for tenants to personalise their homes and keep pets and legislate for a national system of rent control for the private rented sector (PRS). There is a lot to welcome in the proposed Bill but the policy on rent controls causes us concern.

With the PRS demonstrably shrinking and social housing development following the same direction, we have concerns around the unintended consequences of capping rents in the PRS leading to a further collapse in supply of PRS homes. Given the cut in funding for social housing in the budget, it is ever more important that any rent control policy is proportionate and based on robust data to demonstrate the need for intervention. If progressed, it should be flexible enough to deal with affordability issues in particular geographies and monitored for unintended consequences such as reducing PRS supply, encouraging rent increases between tenancies, and discouraging investment in repairs and improvements. We are not confident that a rent control policy will be able to meet these policy goals.

So, what do Scotland’s housing professionals do in the face of these challenges? With the funding and policy landscape so challenging, it is incumbent on all of us to work collaboratively to challenge politicians on their decisions and make it clear there is still time to change things. For 2024, we all need to come together. In previous years, we may have had a range of competing priorities but there is clarity about the need to focus on our housing supply and homelessness services and make it clear that the only response to the systemic crisis facing Scotland’s housing sector is a political one.