Social landlords deliver development
The current political focus on delivering new social housing, focusing purely on private development, is obscuring the true development picture within Scotland.
Social landlords and developers are increasingly proving an important source of new homes within our communities. Many are developing in areas where homes are required, but are often unviable for the private sector. Offering social rented, mid-market rent and shared equity options, these homes are fulfilling the need for high quality, modern affordable homes.
The social landlord development sector has been particularly active in Glasgow. Social housing unit starts reached 1,223 units, more than double that delivered by the private sector, or 69% of all development. The delivery of these homes is being supported by strong engagement between Glasgow City Council and social landlords.
The lack of S75 affordable housing requirements has not deterred new affordable development, but it is instead encouraging social landlords to actively develop new homes, instead of relying on windfall sites in a city where viability can pose a challenge.
Regenerating residential
Residential development is proving a popular means to reinvigorate areas which previously were dominated by industrial uses or poor quality housing stock. These schemes deliver new homes across a range of tenures and product mix, crucially including family housing as standard.
The popular mix of attainable pricing and central locations results in strong sales rates in regeneration schemes in both cities, often with waiting lists for future phases.
During the year to March 2017, around 310 sales of units below £200,000 were supported by Help to Buy in Glasgow and 180 in Edinburgh. Of the units analysed in this study 49% of new homes in Glasgow were within this bracket, meanwhile only 22% were in Edinburgh.
Whilst this has been positive for first time buyers in Glasgow, it highlights the viability challenge facing many developers, particularly in relation to the increasing costs of labour and materials, despite an improving market. Within Edinburgh it highlights ongoing affordability challenge for purchasers.
Prime purchases in popular spots
A small yet very active part of the market in both cities is the premium development sector, which is increasingly diverging from the mainstream market as competition heightens for the best locations. This is having two crucial implications: when quality development does come forward it is achieving a considerable premium and this is being matched by increased aspirations regarding design and specification.
It is also creating an active market on the periphery of these areas as purchasers seek value for money. For example, Glasgow’s Partick and Maryhill, and Edinburgh’s Dalry and Bonnington all border well established, high value areas which are currently attracting premium rates.
Retirement
The active downsizer is fuelling demand in prime hotspots. These are often equity rich, lifestyle driven purchasers seeking high quality developments in urban locations, near cafes, bars and restaurants. Their product expectations include spare bedrooms, quality private and public amenity space and the highest specification they can afford.
While such buyers are often able to release equity, they are not representative of the entire retirement demographic and there is a need to deliver across the tenure range and price points. We welcome the introduction of the Help To Buy for Over 65s but more needs to be done to support and encourage this segment of the market.