Scottish planning and the housing emergency: Navigating the policy maze and development uncertainty

Scotland’s housing market is in a critical state, faced with a pressing shortage of affordable homes and an increasingly complex planning landscape. Fiona Simpson, Chief Planner, and Ivan McKee, Minister for Public Finance, stress the need for positive and constructive collaboration across the sectors to support delivery of new homes to address the declared national housing emergency (15 May 2024). The government also recognises there’s an urgent need to clarify the rules and expectations around planning in Scotland to provide a stable environment for developer investment. This is compared to the current state of confusion and uncertainty that clouds the housebuilding industry, with developers facing conflicting messaging, lengthy timelines, and restrictive policies that threaten housing delivery across the country.

With the declaration of housing emergencies by 12 Scottish local authorities, covering approximately 53% of the country’s population, the Scottish Government has also issued a ‘call to action’ to all local authorities stating that it ‘expects to see an emergency-led focus in decision-making on plans and applications’ going forward. Despite this positive rhetoric, the Division of Planning and Environmental Appeals recently dismissed 16 out of 18 planning appeals which were on hold pending the outcome of the Mossend decision. This has resulted in the refusal of approximately 3,500 new homes and only 125 homes are ‘minded’ for approval. Navigating the varied local policy approaches and progress of local authorities towards ‘new style plans’ to deliver much-needed homes is anything but straightforward.

The housing declaration: A promise under pressure

In a bid to address Scotland’s recently declared housing emergency, both the national government and several local authorities have issued bold housing declarations. These are, at face value, commitments to tackle the housing shortage head on and increase supply. But for these declarations to be more than aspirational, the frameworks supporting housing development must be realistic and implementable. The restrictive policies currently shaping planning applications, however, are far from conducive.

One of the most contentious policies centres around the emphasis on developing brownfield land while imposing strict limitations on green belt and countryside development. While the ‘brownfield first’ approach is a key tenant of sustainable development and broadly supported, the reality is that brownfield sites alone are unlikely to provide the scale and type of housing Scotland urgently needs.

There are also questions over whether development of such sites for housing would provide the right type and tenure in locations where it is needed. Furthermore, brownfield land is often more expensive and technically challenging to develop, and can give rise to insurmountable viability issues, especially for SME housebuilders. These limitations are part of the complex picture that has resulted in a frightening slowdown in housing delivery in Scotland. Recent Scottish Government statistics highlight that there was a ‘17 percent decrease in all sector housebuilding starts and completions between 2023 and 2024’. All of this clearly undermines the immediate housing needs of Scottish communities and demonstrates that the necessary action is not being taken in planning decision-making.

The Mossend decision: A case study in mixed messaging

The ‘Mossend decision’, released in May, has added to developers’ uncertainties. The Scottish Government’s decision to uphold West Lothian Council’s refusal of planning permission for a housing development on unallocated land sends a stark message to developers: even where housing need is evident, unallocated land remains off limits.

This decision directly contradicts Scotland’s overarching housing emergency declaration; if the national government is serious about solving the housing crisis, it must ensure consistency across its policies and decisions. For developers, especially SME builders who depend on more accessible planning processes, this decision reinforces the sense of unpredictability that currently surrounds Scottish planning law. Without clearer guidance and a more unified approach, it’s difficult for developers to plan projects confidently, particularly during the transitional period as local authorities adopt new-style local development plans compliant with National Planning Framework 4 (NPF4).

Much-needed relief from this challenging landscape may lie in increased emphasis being placed on NPF4 Policy 16c. This policy supports applications that address identified gaps in housing provision, particularly affordable housing, in areas experiencing acute affordability crises. If local planning authorities start to prioritise this policy over others, it could mitigate some uncertainty by providing a clarity around supporting developments that address pressing local and national housing needs. However, the success of this approach depends on authorities’ willingness and capacity to adapt swiftly, balancing their strategic objectives with the immediate need to provide affordable homes.

The path forward: Suggestions for navigating the planning maze

To chart a way through, policymakers must reconcile restrictive policies with Scotland’s urgent housing needs. Following discussions with industry professionals and keeping up to date with the latest announcements from the Scottish Government, we feel the following aspects are part of the solution to unblock the housing sector and help deliver new homes:

1. Increase flexibility for affordable housing on unallocated land. For developers to have a better chance at planning approval on unallocated sites, they could offer higher levels of affordable housing provision, enhanced individual and communal amenities, better and more green space (in networks), biodiversity enhancements, and better connection to local public and active transport infrastructure.
2. Encourage brownfield development through supportive funding. Brownfield development should remain a priority, but it cannot be the sole solution. To make brownfield development feasible, particularly for SME builders, financial support or tax incentives from the government are essential. Lowering the cost burden on these projects would also help bolster investor confidence in Scotland’s housing market and encourage development on brownfield sites that might otherwise remain dormant.
3. Promote the refurbishment and reuse of existing buildings. Encouraging the refurbishment and adaptive reuse of existing buildings on brownfield land aligns with policy requirements for sustainability and low embodied carbon in construction. By prioritising projects that reduce demolition waste and enhance energy efficiency, Scotland can meet its housing needs in a way that also addresses climate change.
4. Provide consistent messaging on housing policy. Clear and unified messaging from both local and national government is crucial to restore confidence in Scotland’s housing market. Policymakers must establish a cohesive framework that allows for realistic assessments of greenfield and unallocated land, especially in areas where housing shortages are most acute.
5. Streamline the planning process for SME builders. Small and medium sized builders are often best placed to take on smaller scale developments that can contribute to Scotland’s housing targets. However, the complexity and length of planning processes can be especially burdensome for these smaller firms. Creating a streamlined, more transparent planning pathway for SME builders could help accelerate the delivery of new homes while supporting local businesses.
6. Most radical approach (as suggested by Homes for Scotland) – if the local and national governments are serious about addressing the housing emergency, then there needs to be a reinstatement of the presumption in favour of sustainable development where there is a shortfall in land supply until new style local development plans are in place.

Conclusion

The current state of housing planning in Scotland is emblematic of a system caught between ambition and restriction. While the intentions behind policies like the brownfield focus are noble, their practical implementation is hindering the very progress they aim to achieve. The housing declarations by the Scottish Government and various local authorities are vital steps in addressing Scotland’s housing crisis, but they will remain empty promises without a planning framework that allows for practical, flexible solutions.

By balancing restrictive policies with realistic opportunities for development on unallocated land, offering incentives for brownfield and refurbishment projects, and providing consistent messaging, Scotland can create an environment where developers feel empowered to contribute to the country’s housing needs. Only then can Scotland hope to meet its ambitious housing goals and ensure that more of its citizens have access to quality, affordable homes.