The recent article by SFHA: https://www.sfha.co.uk/news/sfha-says-declining-housebuilding-figures-underline-scale-housing-emergency highlights the challenges faced in making any substantial inroads to address the housing crisis in Scotland.
The article draws attention to statistics recently published by the Scottish Government showing that the number of homes built by housing associations in the year to June 2025 fell by over 30% as the social sector started fewer new-builds than at any point since 1997.
This is a concerning statistic given the dire need for social housing in Scotland today. With the number of completed homes sitting at only half what is required, there is ever-increasing pressure on RSLs to develop in what are obviously challenging times.
Significant increases in building costs for social homes – Surging building costs threaten plans to tackle housing emergency, warns SFHA | Scottish Housing News – coupled with increased cost of private finance have made developing new social housing more challenging than ever. This obviously makes the Scottish Government’s announcement of its four-year £4.9 billion plan for the affordable housing budget a very welcome one, but the sector is left asking the question of whether this will be enough to ensure that targets for essential new build social housing are met.
There is no doubt that RSLs are doing all they can to rise to the challenge. New-build development can be daunting, especially for smaller organisations but having the requisite in-house expertise, or sourcing this from external development consultants, including partnering with other RSLs is the first step in confidently embarking upon new or simply paused, development programmes. Early consultation with lenders is key, and having loan facilities in place prior to embarking on a procurement process to appoint a contractor avoids having ask the contractor to hold their tender open until the private finance is in place.
Considering alternatives to traditional procurement procedures is also advisable, including using established frameworks, considering applicable exemptions in procurement legislation to the requirement to carry out a full procurement procedure, or partnering with developers through s75 arrangements or similar, as well as partnering with other RSLs. Attracting a range of contractors to bid for new build development contracts can sometimes be challenging, particularly for rural RSLs, so careful consideration of the requirements of a procurement process is required to encourage competition.
Contractor insolvency has been a significant issue facing the sector for many years, particularly during and after Covid and so developing RSLs must consider ways to mitigate the impact should the worst happen. Performance bonds, parent company guarantees, project bank accounts, robust contract management and collateral warranties from sub-contractors all play an important role in achieving this.
If you are a developing RSL our team would be delighted to discuss how we can support you. Feel free to contact us.
