Scotland’s Housing Needs

It has been nearly 10 years but Scotland once again has a contemporary estimate of the national level of affordable housing need. In the first half of the 2000s, Glen Bramley of Heriot-Watt University produced a number of studies for the Scottish Executive. Government analysts continued working on methodologies for local housing needs and demand studies. But only now in 2015 has the 2006 Shelter/SFHA/Chartered Institute of Housing been updated.

Researchers from Sheffield Hallam University, the University of Sheffield and the University of St Andrews carried out the study. The material published and circulated on social media is the summary report – so more detail is to follow as well as an opportunity to look closely at the assumptions and methods deployed to arrive at a national estimate of housing need. Today we are just talking about the summary highlights.

The research team constructed a pan-Scotland estimate of affordable housing need, which is internally consistent and builds on the needs and demand (HNDA) work by Scottish Government analysts. The authors contend that their work complements rather than challenges the official HNDA approach. The summary report only provides an overview of the model deployed but it is based on core assumptions found in the Scottish Government’s HNDA Tool for local analysis. It is based on a common type of needs model constructed from the sum of backlog and newly arising housing need from which the normal level of new affordable housing supply is subtracted to arrive at the ‘gross affordable housing requirement’.

As an affordable needs approach, the research effort is to estimate the additional affordable housing required for households whose needs would not met by the market. The research team point to a number of reasons why needs are substantial and may be rising: welfare reform, the steady rate of growth in the number of Scottish households, an upward trend in house prices and private rents, low levels of housebuilding and continuing though falling levels of homelessness.

The research team derive the central estimates of their core model a requirement for additional affordable housing of 12,014 dwellings per annum (overall, estimates vary from 10,435 to 14,678). A number of scenarios are run to test these estimates and the authors conclude that house price inflation is likely to be a more important source of sensitivity to these numbers than would be migration. The figure of 12,014 housing need is not only substantially higher than the 2006 estimate, it is twice the level of the Scottish government’s target for social and affordable housing supply that has applied through the current Parliament (2011-2016). The authors estimate that for the same level of average grant support as at present, (£58,000 for new social housing), fully funding meeting the 12,000 need target annually would cost the Scottish Government just below £700m, which is £360m more per annum than current levels of new supply affordable subsidy spend in recent years. This is a significant additional commitment in these austere times.

It is good to see these new numbers and their degree of support from both the funders and, implicitly, from the Scottish Government too. Closer scrutiny will have to wait for more leisurely examination of the full report. For one thing, it will be interesting to see what Glen Bramley makes of the new study. I will also want to see just how the model works in detail.

A few years ago I was involved in Scottish Parliament scrutiny of the housing elements of the 2013-14 draft budget and we were keen then to have a credible up to date level of housing need with which to compare the nature and level of the programme in place. Now we have a sense that need has increased significantly and that funding would have to increase substantially to meet it. Unless there are other ways to increase the supply of affordable housing which allow the Scottish Government to spread the public cost of the programme in different ways with some other mix of instruments and interventions. Currently, the affordable homes programme is targeted to provide a mix of 2/3 social to 1/3 affordable supply. On the basis that per unit affordable housing subsidy is shallower (but still enables HB to be paid on the higher rent), it might be possible to derive a larger total supply programme with a change in the mix. Could that be acceptable?