Housebuilding, Affordable Homes, and Second Homes in Scotland: Year to September 2024

Scotland is in the grip of a housing crisis, with housebuilding slowing dramatically and affordable housing targets looking increasingly out of reach. At the same time, tens of thousands of homes lie empty or are used as second properties, a juxtaposition that highlights the inefficiencies in the current system.

While the Scottish Government has made ambitious pledges to increase affordable housing, recent data paints a stark picture of declining new builds, sluggish social housing starts, and a worrying mismatch between housing availability and demand.

According to the latest figures, Scotland saw a 12% drop in housebuilding starts and a 10% fall in completions between 2023 and 2024. This equated to 14,768 new builds started and 19,828 completions over the year ending September 2024.

Breaking it down further, the private sector constructed the lion’s share of new homes, completing 15,056 units, while the social sector delivered just 4,772 homes. Building work on new private sector homes reached its lowest point since 2013, excluding the COVID-affected 2020 period. Meanwhile, social sector completions were at their lowest level since 2017.

The Scottish Government’s Affordable Housing Supply Programme (AHSP), a key driver for the delivery of affordable homes, also faced setbacks. While the number of approvals rose by 9%, starts and completions fell by 8% and 22%, respectively. This leaves the Government significantly off pace to meet its target of 110,000 affordable homes by 2032, of which at least 70% are intended for social rent. As of September 2024, only 24,382 affordable homes had been delivered, with more than three-quarters of those designated as social rent.

With the Scottish Government aiming to build 110,000 affordable homes by 2032, this shortfall raises questions about how achievable this target is, particularly given rising construction costs, labour shortages, and inflation.

While the number of newly built homes is on the decline, thousands of homes across Scotland remain empty or are designated as second homes. Recent council tax data reveals that as of September 2024, there were:

• 21,606 second homes (properties used as holiday homes or part-time residences).

• 43,538 properties empty for more than six months, of which 31,596 have been empty for over a year.

• 47,779 unoccupied exemptions (homes that had been empty and unfurnished for less than six months).

While the number of second homes has decreased by 10% (partly due to the introduction of a 100% council tax premium on second homes), the number of long-term empty homes rose by 12%. These properties remain a glaring opportunity for housing reform.

One proposed solution is to bring these empty homes back into use. While several councils offer support for landlords and owners to renovate and re-tenant empty homes, this approach has seen limited success. Critics argue that a more forceful policy, such as increased taxes on long-term empty homes, is needed. The Scottish Government's Empty Homes Partnership has had some success, but clearly, more decisive action is needed.

It is difficult to reconcile the image of 43,538 empty homes with the reality of thousands of people waiting for affordable housing. The mismatch is glaring. On the one hand, councils and housing associations are struggling to keep up with demand for social housing, while on the other, there are tens of thousands of vacant properties that could be repurposed.

Part of the issue lies in the status of these properties. Some are second homes, deliberately left unoccupied for part of the year, while others are vacant due to legal disputes, inheritance issues, or general neglect. The introduction of a 100% council tax premium on second homes in April 2024 has led to a 10% reduction in second home numbers, but this policy has done little to address the rise in long-term empty homes.

For first-time buyers, the drop in private sector completions is a worrying sign. Less new housing supply means higher prices, making it even harder for people to get on the property ladder. The Scottish Government’s Affordable Housing Supply Programme was supposed to alleviate this pressure, but the declining number of social housing starts raises doubts about its effectiveness.

The "housing-first" model, which aims to prioritise permanent housing for people facing homelessness, also risks being undermined. Without the pipeline of new social homes, councils may struggle to meet housing demand, and existing social tenants may be forced to stay in unsuitable housing for longer.

To solve the housing crisis, Scotland needs a multi-faceted approach that increases the supply of affordable housing while also bringing empty homes back into use. Potential solutions include:

• Expanding Compulsory Purchase Orders: If homes remain vacant for more than 12 months without a valid reason, councils could be empowered to purchase them for affordable housing. Although this is an extreme option and should be used as a last resort if at all.

• Scaling Up the Empty Homes Partnership: With more funding and support, this scheme could bring thousands of homes back into use.

• Increasing Social Housing Budgets: While building new homes is expensive, the long-term impact of failing to house people is far greater. The Scottish Government may need to increase grants and funding for councils and housing associations to hit its 2032 target.

• Better Use of Vacant Commercial Spaces: Retail units and offices left empty after the pandemic could be repurposed as residential housing.

Scotland's housing crisis is a tale of two extremes: thousands of people in need of affordable housing and tens of thousands of homes lying empty. The 2024 data makes it clear that housebuilding alone cannot solve the problem. Policymakers must address the root cause,  underused housing stock, and develop policies that incentivise landlords and owners to bring properties back into use.

The juxtaposition is striking: thousands of new homes are needed, yet thousands more lie empty. While the Scottish Government's actions to increase taxes on second homes are a positive first step, it is clear that more radical reforms are required. Bringing empty homes into use, increasing affordable housing starts, and rethinking the use of second homes are essential parts of the solution.

As it stands, the current approach is too piecemeal to make a significant impact. With construction rates slowing and more homes being left empty, the risk is that Scotland's housing crisis could deepen in the years ahead. A bold, unified strategy is required, one that addresses both the shortage of homes and the surplus of unused properties.