A POST-pandemic finance model for Scotland’s public rented housing sector could deliver a vital economic stimulus after the lockdown and allow councils to build unlimited high-quality homes without subsidy at a lower cost than present, a think tank has said.
In a policy document published today, Common Weal said the housing sector is deeply unbalanced with owner-occupiers faced with inflated prices out of the reach of many, while delivering draughty and poorly-built homes to those who can accord them.
Likewise, the inflated private rental sector trapped many, unable to pay rent while saving for a deposit to buy; and a deeply stigmatised social rented sector, so run down over decades that it is no longer fit for purpose.
The report, Good Houses for All, said Scotland’s market should offer a quality public rental option for anyone who needs it and, while public policy should seek to constrain house price rises, it should also ensure the highest thermal performance for new-builds. It said Scotland also needed an economic stimulus after the Covid-19 lockdown, which could be created by public rental house building linked to industrial strategy.
Report author Dr Craig Dalzell, Common Weal’s head of policy, said there was a three-stage finance model to achieve this at unlimited scale without public subsidy.
The first was using “land value capture”, whereby the public sector would buy land only at its “existing use value”, and not its later worth with planning permission – how it is bought at present.
Money would then be borrowed from the Scottish National Investment Bank (SNIB) over mortgage-length periods with borrowing costs spread over that timescale to keep rents low.
Then a proper maintenance budget would be built in so the homes remain high quality “in perpetuity”.
Dalzell told The National: “Scotland has not been well served by the housing policies of successive governments. We have been forced to put up with overpriced, cold houses and largely left to the mercies of ‘the market’ and told that there is no other way. Where parties have offered to build more houses, they rarely go further than offering a few more than their opponent offered – few ask, ‘have we built enough?’
“This paper leaves no more room for excuses or delay. It shows that Scotland can solve the housing shortage, solve a good part of its climate emergency obligations, eliminate fuel poverty and break the private sector’s choking grip on high house prices.
“This was relevant even before the pandemic, but as we look to what we do after the crisis, it also offers a way of stimulating and reforming Scotland’s construction sector into something better without lining the pockets of the volume builders who failed us prior to the it.
“This is how Scotland can build the houses that we all deserve.”
The initiative would entail the SNIB being given immediate dispensation to operate as a “proper bank” and local authorities opening lists for families who wanted to live in one of the new houses. Councils would then tailor supply to meet demand.
These “green” homes would also be considerably cheaper to maintain, according to the report, which gives the example of a three-bedroom family home in the current market incurring a monthly cost in rent, heating and maintenance of around £1400.
It said a house built using the suggested methodology would have a monthly total bill of only £820. The report said Scotland should seek to replicate Germany’s levels of price and rent stability in the housing sector, where security of supply was key.
Craig Berry, from the SNP Common Weal Group, said: “We need to fundamentally change our approach to homes and communities.
“This paper represents the opportunity to tackle the problems we face in housing, such as sky-high rents, ever increasing inequality between those with property and those without, and the forces of gentrification and under-investment displacing our communities.
“There is wide support among SNP members for changing the system to deliver high-quality, affordable public rental housing at the demand of our communities.”
Labour MSP Pauline McNeill added: “This report could be the basis of a much fairer post lockdown economy where there will be an even greater imperative to focus on housing options in the public sector that help to expand options for all.
“The coronavirus shines a light on the need for better standards in housing and the need for radical options.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel