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Students in edinburghnpfsnpsnpYour browser does not support the element. are in for a treat. If its plans are approved, Ediston, a developer, will soon build hundreds of student rooms on the northern edge of the New Town, the most elegant part of a fine city. Or perhaps you would prefer to study in Glasgow? If so, you might be able to live in a new tower, the Ard, which will be Scotland’s tallest residential building. The surge of high-quality accommodation is a boon for students. But it is also a sign that something has gone badly wrong in Scotland’s housing market. Developers are putting up student housing because it makes little sense to build anything else. For that, thank the Scottish government.In the second quarter builders started work on 3,344 homes—the lowest quarterly number for a decade, excepting the spring of 2020 when covid-19 rampaged. Construction of private homes is down sharply; social house building has fallen by more (see chart). Builders have been idle in England, Northern Ireland and Wales too, but the slowdown in Scotland has been exceptionally abrupt.Market turmoil is one reason. In 2021 the price of construction materials in Scotland jumped; the next year, mortgage rates went the same way. Many small builders have folded under the pressure. Homes for Scotland, a trade group, estimates that in the late 2000s at least 40% of homes were built by firms that put up fewer than 50 homes per year. Small outfits now build less than 20% of a smaller total.The planning system is irksomely slow, as it is elsewhere. Scotland has some new rules known as 4, which are gumming things up while local authorities get used to them, says John Boyle of Rettie, a property firm. Over the past five years the length of time taken to decide a local planning application has crept up from nine weeks on average to 11 weeks; major developments take more than a year. In May a court ruling over a proposed development known as Mossend, between Edinburgh and Glasgow, made it easier to block the bulldozers.Worse still is the meddling in the private rental market. In 2022 the ruling Scottish National Party () and its then ally, the Green Party, temporarily capped rent increases at 3% a year. A new housing bill will allow ministers to control rents for longer. In a panic some developers cancelled “build to rent” projects. Others switched from rental flats to student rooms, which are not covered by the bill. Hence the fancy digs in Edinburgh and Glasgow.As if the troubles in the private market were not enough, the Scottish government has cut funding for affordable homes, including rented ones. At the same time it is pressing for dramatic improvements in energy efficiency in those homes, which ought to have a welcome effect on bills but will have an unwelcome effect on construction costs. Private and social house-building are linked, because developers are often required to build mixed estates with a proportion of affordable homes.Scotland’s housing minister, Paul McLennan, played the old nationalist tunes in a statement about the housing market in early October. He blamed the government in Westminster for the rise in construction costs and mortgage rates, and for the cut in funding for affordable homes. It did not go down well. “Those in need of a new home deserve better than that,” sniffed Homes for Scotland.The blame-shifting in Scotland contrasts with the situation in Westminster, where the new Labour government has loudly promised to build more homes (whether it will succeed is another matter). It also creates an opportunity for Scottish Labour. On September 18th, as the leader of the marked the of the independence referendum, Anas Sarwar, the head of Scottish Labour, spoke at a housing conference to lament the Scottish government’s record. He will not run short of things to complain about.
