Official Report 268KB pdf
Good morning and welcome to this week's meeting of the Rural Affairs and Environment Committee. I remind everybody to switch off their mobile phones and pagers, or at the very least switch them into flight mode, so that they do not interfere with the sound system. I have received apologies from Mike Rumbles. I am expecting the other members who have yet to turn up. I understand that there are some serious traffic difficulties in Edinburgh at the moment, which might be one reason why we have a slightly lower turnout than usual.
Good morning. I was interested to read in your written evidence your suggestion of a problem with local plans falling out of date. Could you tell us how you would amend the local plan process? Is it too restrictive and do we need to wait too many years before being able to update it? Should more constant revision be possible? You refer to
The process has become very much focused on delivering the local plan, rather than on delivering the housing through the local plan. That has led to difficulties with land release, particularly in rural areas. There is good practice in local authority areas such as the Borders, where the annual housing land audit involves all the stakeholders and closely examines all the sites that are identified through the local plan; in that way, if there are any deliverability problems, they are addressed on an annual basis rather at the end of the local plan process.
Please do.
Part of the problem is that the process of creating the local plan takes so long that authorities have become terribly possessive or protective about their plans once they have finished their gestation. When Scottish planning policies come along in the late stages of the process, or even after the local plan has been approved, authorities seem to be reluctant to adopt the measures that are contained in those SPPs.
You mention that the Scottish Borders Council provides a good model. Do you think that other local authorities could learn from the Borders? Could the model there apply across the country?
Certainly, the housing land audit involving stakeholders from all areas, both private and public sector, is an aspect of the process in the Borders that could be adopted elsewhere. That happens to varying degrees elsewhere, but the practice has been relatively formalised in the process in the Borders. I would advocate that that should be done in other local authority areas.
Previous evidence that we have gathered suggests that there are significant inconsistencies in planning guidance for rural housing, with differences, for example, between guidance that discourages new housing in remote areas on environmental grounds—taking into account transport inefficiencies and so on—and guidance that encourages it on grounds of community sustainability. Can you provide practical examples of how contradictions in planning policies and guidance have inhibited the provision of housing in rural areas?
Again, I will start with the south of Scotland. The new pilot grant scheme, rural homes for rent, is directly available to landowners and is applicable throughout Scotland. We have a couple of members in the Borders and East Lothian who wish to develop small-scale affordable rented housing in their respective local authority areas. They both wish to extend existing terraces of vernacular cottages. The policy in the Borders allows for the extension of building groups in the open countryside. In East Lothian, on the other hand, there is a complete presumption against development. That is one aspect where there is a disparity between local applications of the policy.
Do other witnesses have examples of inconsistencies involving different pieces of legislation?
In Highland, a review of housing in the countryside policy is taking place. I do not know how that relates to the Scottish Government's view of the matter, but it is certainly more difficult for private landowners and registered social landlords to access land in the countryside if it is not designated in the local plan.
To provide another example, the presumption in Aberdeenshire has been that farm steadings, for example, may be modified but only to be turned into two residences. If we are trying to create affordable rented housing, the two residences made out of a steading might be far too big for them possibly to be viable and affordable, so there is a bit of a conflict between what the planning authority is saying and what housing policy might desire to achieve.
In Aberdeenshire, there is often disparity or conflict between what the rural transport strategy says and what the affordable housing policy dictates in terms of sustainability. In some rural areas, affordable housing cannot be developed unless it is on a public transport route—and we all know that public transport in rural areas is a contradiction in terms.
So there is an inconsistency in planning policies that seriously needs to be addressed.
Yes.
Thank you for your individual concrete examples, which are extremely useful. Take it as read that, whatever questions we ask this morning, if there are concrete examples to highlight what you are saying, we would like to hear about them. It is useful for us to know that we are dealing not just with hypothetical or theoretical issues.
Yes.
So there are two different contradictions at work.
In previous evidence, it has been suggested that some housing associations have difficulty in acquiring land in pressurised areas because local landlords or developers are not keen on developing land for affordable housing. Andrew Bradford's previous answer partly touched on that question, but I wonder whether he could comment further.
There is a perception that that is the case. However, way back, at about the turn of the century, Scottish Homes investigated that subject in particular for its report 83 and came up with the figure that 60 per cent of the landowners and landlords who were interviewed were more than willing to make land available for the development of affordable housing. The average parcel of land that was available was around 5 acres per person. From memory, I think that the report suggested that 26,000 acres of building land would be available. That land was not all on top of bens; it was, generally, fairly practical land within reach of communities and settlements. So the evidence seemed to be that there was a willingness for land to be made available for affordable housing. Another finding of the study was that there was an unwillingness to give land away for affordable housing only to see it sold on subsequently by others for a large profit.
If 60 per cent of landowners, which is quite a large percentage, were willing to make land available for affordable housing, that means that 40 per cent, which is also a large number, were unwilling to do so. Do you have any idea why they might have been unwilling?
The report suggested that the unwillingness stemmed from the fact that there were no sensible mechanisms in place to provide for and assist the development of affordable housing on that land. Generally—there will be exceptions to this—we have found that housing associations prefer larger-scale developments that are more centrally located for the blindingly obvious reasons of economy of scale and operation. It may make a huge difference to a small community if two or three additional affordable houses are built there, but the associations are not generally willing to have three houses to inspect that are 30 miles away from their main sphere of operation. We have long suggested that the organisations that could supply and are supplying affordable housing in such locations are in the private rented sector, which operates within 2 or 3 miles of settlements and closer in many cases.
Can I just clarify one last thing? When you talk about larger-scale housing, what scale are you thinking of?
Generally, I would think of developments of 50 houses or more as being large scale although, to be honest, in the context of a rural village, 10 houses would probably be considered a large development.
Some of the 40 per cent of landowners to whom Andrew Bradford referred were prohibited from selling land because of the way in which their trusts were set up. The establishment of the trusts meant that the landowners had to retain all their assets and, if they wanted to sell anything, they had to go through a very complicated procedure. It was not that they were unwilling; they were simply unable to dispose of land.
In rural Perthshire, Atholl Estates rents out 260-odd housing units to local people, many of them at affordable rents. It is by far the biggest landlord in rural Perthshire, and it is absolutely willing to make land available for affordable housing—but it has to be within the trust mechanism and under its control. That is where we have to find new methods of engaging with landowners, particularly those whose land is held in trust. We need leasing arrangements that allow landowners to retain some security over their ownership and control of the land.
Homes for Scotland has told us that there is no evidence to support the claim that private sector land banks are detrimental. You take a slightly different view of land banking. I would like to explore your views on land banking, although I do not need all three of you to answer.
Land banking sometimes has its place. In rural areas, land banking in its strictest terms is not good for the sustainability of the community. However, if land banking occurs with a clear development programme in place, which is going to be delivered within the local plan period, I have no issue with it.
Okay. We need to move on a wee bit. I think that Peter Peacock has some questions about infrastructure—is that correct?
Yes, I do, but there is something else that I want to bottom out on planning if I can do that.
Very quickly.
You make the point in your written submission that, in your view, SPP 15 is sufficient to allow all the necessary development in rural areas if it were interpreted properly. Let us leave aside for a moment the fact that SPP 3 may be an advance on that Government guidance. You then talk about better enforcement of local authorities' duty to follow that guidance. Can you suggest how that would be done?
We are talking about local authorities not taking cognisance of the guidance in considering applications. That relates to the issue of local plans possibly being slightly out of date. There is sometimes a fight with a local authority to get it to take into consideration guidance such as SPP 15, whereas other local authorities revised their guidance, where applicable, as soon as SPP 15 came out. The enforcement that we are talking about is really elected members in a council ensuring that its policies are up to date.
So it is not a question of having a national system of enforcement for local authorities; it is about councils having internal support for following the guidance.
Yes.
Fine. I have one other question on planning, which relates to the supply of land. A number of people have argued that, within the planning system, there should be a separate use class for affordable housing rather than just a use class for housing. Planning is, essentially, about land use, and land that has been determined for housing is not determined for a specific type of housing. It has been argued that, if a distinction were made between land for general housing and land for affordable housing, we could see the release of land purely for affordable housing. Is there any merit in that proposal?
Being a housing professional rather than a planner, I am often accused of having a simplistic view of planning. Nevertheless, I sometimes think that that is the proper view to take. I think that the allocation of sites for affordable housing within the current policy framework would deliver the affordable housing that we need without having to go through the whole process of setting up another use class. That is the approach that the SRPBA advocates.
Okay. Let us move on to the issue of infrastructure. Andrew Bradford has touched on a feature that we have come across in our inquiry, which is that people pursue economies of scale in planning—that is, they ensure that they are going to build enough houses to justify the provision of sewage treatment, water supply, electricity, roads and so on. However, we have also received evidence that we apply too many urban standards in rural settings and that it might be better to build unplugged houses with individual, modern septic tanks for sewage treatment and local water purification systems. Lots of land might be released if a more liberal approach were taken to the use of such technology in the building of single houses or developments of two or three houses in the countryside. What is your view on that?
I have been a director of a rural housing association for close on 20 years. The demands that are increasingly being put on housing associations to develop single houses or small groups of two, three or four houses in rural areas and the requirements of the Scottish Environment Protection Agency, Scottish Water and roads departments are putting up costs that were already high. It would be helpful if there were some guidance that allowed discrete developments to meet lower standards. I do not mean that standards should be universally lower in rural areas, but it might be possible to allow discrete developments to be built without requiring all the paraphernalia that would be necessary in an urban setting.
Do you know of anywhere where that kind of approach would have led to the release of sites for housing in rural areas?
The committee could spend its holidays in rural Ardnamurchan, looking at sites where urban solutions have had to be put in place at a high cost in order to gain planning permission.
We are aware of small developments in which alternative methods have been permitted. We saw an example of that at Ballinluig, with sewage treatment. Why is there a difference between areas, given that the issue is for SEPA and Scottish Water rather than the local planning authorities?
It may well be, but everyone is trying to look after their back. Everyone wants the highest, top-specification solution.
Yes, but we know that, in some areas, alternative proposals are accepted and have been used. Why does that difference between areas exist?
Local authorities take different approaches. I am not asking for complete consistency across the patch, as I do not think that we will ever achieve that, but where a good rural solution has been found, it should be used as a case study for other local authorities.
So you suggest that it is the local authorities rather than SEPA or Scottish Water that are the problem. We have been told that it is more likely to be SEPA or Scottish Water.
The issue is the engagement between the local authority and SEPA and Scottish Water, certainly in highland Perthshire. The planning application process and the consideration of the solutions—on which the planning authority is key—work better in some areas than in others. In Dumfries and Galloway, we had a member who could not proceed with an affordable housing proposal and could get no assistance from the planning authority in his discussions with SEPA and Scottish Water, which were trying to impose a £0.5 million water treatment plant for five houses.
That is maybe a bit clearer.
Wholly unplugged houses are one solution, but when one looks across rural Scotland—Drew McFarlane-Slack mentioned Ardnamurchan, but the same is true closer to home—there are many largely unplugged houses already, with their own septic tanks and water supplies. Measures can be applied easily to ensure that those water supplies are adequately pure. Those houses often have a track, so perhaps the only real main connection with outside services is the electricity supply. When we talk about an unplugged house, we perhaps get the idea of needing a windmill and the whole bang shoot, but there are hundreds or thousands of existing examples of largely unplugged houses that work.
I want to move on to another territory.
What is it? I have one planning question hanging that I want to bring in and then we can come back if it is a new issue.
It relates to planning but also to the infrastructure issues.
Okay.
You refer in your written evidence to the need for local authorities and the private sector to work more closely together and you have touched on that in your oral evidence. You suggest that local authorities do not think enough about the private sector when considering housing solutions. For example, we have the situation with old properties; the issues of finding land through the planning system; and the issue of local authority liaison with SEPA and other bodies in negotiating solutions for housing supply.
The approach certainly has to change. When I was politically in charge of a local authority housing department, we gave no real thought to proper engagement with private landowners. However, things have changed. Some years ago, Highland Council, along with registered social landlords, helped to develop the Highland Housing Alliance that Sarah-Jane Laing mentioned. That was a direct intervention in the private market by the public sector, to try to create a land bank of mixed housing—not just social housing but private sector housing as well. Such interventions head some way in the direction in which local authorities have to head. Local authorities will have to engage better; they will have to take more steps.
From your experience in the Convention of Scottish Local Authorities, would you say that such an approach could apply across Scotland? Does everybody need to move in that direction?
Absolutely. Highland Council has moved quicker than almost any other local authority in that regard, but things have to go further.
A great number of local authorities have moved. The mood today takes far greater cognisance of the role of the private rented sector.
Would your criticism be that, in the construction of policy, people do not think enough about the private sector, or positively exclude it?
I have not examined all local housing strategies, but I am sure that the private rented sector is mentioned in them all. At the moment, the file containing the actions achieved through local housing strategies in the private rented sector is probably pretty thin. We have not yet transformed words into actions.
Part of my role involves engagement with local authorities in the housing process. When I started three and a half years ago, I had active engagement with three or four local authorities, but now—
Which ones?
At that time, it would have been Perthshire, Scottish Borders Council—
Perth and Kinross, you mean.
I am sorry—Perth and Kinross Council, Scottish Borders Council, East Lothian Council and Highland Council. However, I now engage with around 20 local authorities. Things have really changed in the past three years.
Des McNulty and I went to Arran recently as part of the committee's inquiry. We were quite struck by a definite belief among local people that landowners were not releasing land for development. I was therefore intrigued to hear you say, Ms Laing, that you accept that some landowners will not release land for affordable housing and that you advocate the use of stronger powers in that regard. I hope that I have accurately reflected what you said. It was an open-ended statement; what does it mean?
With empty properties that have been allowed to fall into disrepair—
We saw some of those in Arran.
Yes. For such properties, there are circumstances in which compulsory purchase orders could be applied. I do not know whether that would be right for every such property in Arran, but in some cases a stronger power would be appropriate.
How might public funds be used more effectively in rural areas to increase the supply and quality of affordable housing?
Huge steps have been taken with the new pilot grant scheme, which, because the money goes towards build and development costs rather than the acquisition of land, will help to deliver affordable housing.
You asked for practical examples; I can cite one, which comes from my own experience. In 1999, we built 14 houses for affordable rent with a research grant from what was at the time Scottish Homes. If the same grant funding had been given to the local RSL that year, it would have constructed only eight houses—I should add that the houses would have been identical to ours. In essence, we got 75 per cent more houses on the ground for the same amount of public investment. However, of late, when I have asked Government about repeating the exercise, its view has been that it does not support the private sector in developing new affordable rented housing.
Why has not only the use of but the promotion of the availability of those grants been inconsistent across Scotland? How might we improve their uptake? While you are on the subject, do you think that any other funding mechanisms or support tools could be created or deployed?
The inconsistency in the uptake of the rural empty property grant stems from the way in which it was handled by the regional offices of the previous Communities Scotland. The Grampian and Highland and Islands offices were very proactive in raising awareness of the grants and assisting people with the application process, but that was not the case with the offices serving the Lothian and Borders and Forth valley areas. As a result, a large number of landowners who wanted to develop property through the rural empty property grant or to release land for the rural home ownership grant have not done so. However, I cannot tell you why that might be.
Please speculate.
In the case of Lothian and Borders and Forth valley, I do not think that enough importance was placed on the rural grant mechanisms. Instead, the focus was on the delivery of the RSL programme and on delivering numbers rather than community solutions. However, that is speculation.
In our submission, we highlight the issue of fiscal impediments to the private rented sector. You might think that that does not bear directly on your question—
We are fascinated. Please carry on.
Any private property that is rented over the long term will at some point have to change hands. However, the present fiscal system seems hell-bent on taking its pound of flesh out of that activity. Surely the Treasury is simply shooting itself in the foot if an enterprise that delivers affordable rented housing has to sell 40 per cent of those properties to pay the tax. Where do those people go? They go to the Treasury to demand money for housing.
That is yet another barrier.
It is there in the background, and I fully appreciate that the Scottish Government cannot deal with the issue in isolation. However, we are looking forward, and we would like to work with you and try to talk it through. This is perhaps not the time to go into great detail, but we would like the opportunity to take that forward and find out whether we can, together, work out a way in which the existing affordable provision is secured—and perhaps encouraged—for the long term.
Implicit in some of your comments has been a view—although I may have picked this up wrongly—that the constraints on the right to buy are not necessarily a bad thing for affordable housing in rural Scotland. That applies to housing association stock and council housing. I see that you are all nodding, so I have not picked you up wrongly on that.
Private sector shared equity, in which the estate retains a golden share in perpetuity, is a model that we would like to try to take forward. At the moment, we are struggling to make it work without public subsidy; we need to examine that. I would also like to examine further the use of the rural housing burden and the rural home ownership grant, because we do not want to lose those plots. I know that those schemes have been used by the Highlands Small Communities Housing Trust, but there is some way to go before they are used effectively throughout Scotland.
So you are also thinking about the issue of affordability on housing for sale?
Certainly.
Provision of affordable rented housing is key. Such housing must remain—it cannot all disappear.
I want to reinforce the point about the 20-year rule. The rural housing burden will work only if that rule is broken. If we cannot go beyond 20 years for leases and we have to reorganise them, that is much less effective.
Peter Peacock had a question on that, but he seems to be happy enough with what he has heard.
We need to consider different solutions for affordable housing. It is about ensuring that a solution is appropriate for the community, in terms of the funding that is available and what is needed, and ensuring that the rurality aspect for RSL development continues under any future funding mechanisms.
So you would be strong proponents of rural proofing, which has become the buzzword.
Exactly.
In general terms, would you prefer rural proofing to be done by way of separate rural policy or within a nationwide policy?
I would prefer it to be done within a nationwide policy, because that would allow for consistency with other policies.
I go along with that. The moment that we have a separate rural policy, we get into the definition of what on earth "rural" means.
Outwith the SRPBA, I have long been a campaigner for mountain areas and the remote islands of Europe. Basically, I am a fan of policies that help those areas, but I recognise that better ways of delivering housing probably exist within an overall policy.
It is clear that the answer is to have local solutions available for local problems. The focus of housing policy should be on the product, which is, in the context of this discussion, affordable housing, whether that is rented or low-cost ownership housing. We have focused for too long on delivery mechanisms rather than on what we want at the other end. We can all quickly define on the back of an envelope what an affordable house is—let us focus on getting that delivered and not worry too much about who is delivering it.
Recently I came across an interesting report that suggested that although wooden houses tend to tie up carbon dioxide, are friendly in global climate change terms, easy to insulate and quite cheap to build, it is difficult to build them because insurers will not insure them. It is clear that difficulties are involved in building affordable housing. How can we produce sustainable, environmentally friendly housing that is also affordable?
I have built 14 environmentally friendly wooden houses with wooden roofs that are barrier free and affordably rented, so may I answer that question?
Yes. You may also comment on insurance.
We were able to insure those houses and to borrow money to build them. I suspect that we were able to do so because we have a reasonably good record with our bank. We rent the houses so that they remain in our ownership. The bank trusts us. I do not know whether a bank would be happy to lend a mortgage on them if they were ever sold, because their construction is somewhat unconventional. I am afraid that I cannot comment on insurance for individuals who do not have a track record with a broker or insurance company.
So there is a difference between affordable construction costs of sustainable housing and affordability in the long term. Two different definitions of affordability exist. One is simply to do with construction; the other is to do with how a house can be run affordably.
Yes.
I refer again to the Highland Housing Alliance, which is running a joint project with a Highland builder to develop pod-constructed, factory-built houses using modern methods of construction. A number of contractors have expressed an interest in that project. Members will be aware that there are a number of German manufacturers of that type of housing. It has to be built to exacting standards and, because it is built inside a factory, those standards can be more readily maintained than they can be on site. The houses can be built to ensure that they maintain their heat. They are built using sustainable principles that allow reduced energy costs over lengthy periods of time.
I have seen similar pack-built houses in Tierra del Fuego, where the weather conditions can be rather poor at times, and they seem to work quite well there.
Gas is miles away, so that is not possible. We are considering a future development with a woodchip-powered district heating system. We have a co-operative in the area that grows trees as a fuel source and we currently export the low-grade timber to Finland—believe it or not—Murrayhill or Cowie. We do that at considerable negative cost to the Scottish public, in that transporting it on the road costs more in road maintenance than the load is worth, so it makes sense to burn it at home.
I take the witnesses back to land release. Their submission says:
When an SRPBA member has sought to work in partnership with an RSL or to release land for affordable housing, there have been cases of resistance from the community because of a lack of knowledge about what affordable housing is. The communities think of it purely as rented housing for people with problems; they do not understand that a range of people in society need to access affordable housing.
How does that work with the legislation on homelessness?
The housing in question was in the private rented sector, so our member was not bound by the homelessness legislation.
I am afraid that a lot of the mistrust comes down to fear of the unknown and lack of information.
I thank you all for coming along. As always, we may follow up your evidence with requests for clarification or further questions. Equally, we invite you to follow up if there is any evidence that we have not got out of you or anything in your evidence that you want to clarify or expand on.
Meeting suspended.
On resuming—
I welcome Jonathan Fair, chief executive of Homes for Scotland, and Bruce Walker, land director for Robertson Homes. We will move straight to questions. I do not know whether you were give any specific times, but we hope to finish by about 11.45.
Good morning, and thank you for coming. Can you give examples of how, as you see it, contradictions in planning policies and guidance have inhibited the provision of housing in rural areas?
I agree that there is a fundamental contradiction because the main housing guidance suggests that most housing developments should be directed to urban areas in order to make best use of existing infrastructure and so on, and that housing development in rural areas should, accordingly, be restricted.
There are differences between national planning policy targets and the priorities that are associated with rural development, affordable housing, infrastructure provision and protection of Scotland's environmental heritage. It can be difficult for local authorities to strike a local balance among those competing aims. National policy is relatively clear on encouraging development in rural areas primarily to maintain the strength of communities and to allow them to grow, but those laudable aims can be overcome by equally important and pressing issues, such as protecting Scotland's environmental heritage.
We have heard evidence that some private landowners have resisted the development of affordable housing on their land. Will you comment on that?
Landowners can have issues with expectations that are placed on them in relation to developer contributions not just to affordable housing, but to education and community facilities in rural zones. On top of that, many local authorities see affordable housing provision almost exclusively as social housing for rent and do not consider the full gamut that is noted in planning advice note 74, which includes shared equity and shared ownership schemes, discounted houses for private sale and housing that is by its nature affordable. Given that, I imagine that some landowners are not entirely happy about encouraging development that they feel is inappropriate in their areas.
So, some landowners might feel that housing for rent is inappropriate whereas housing for sale is appropriate.
Some landowners might have that perception. We have heard evidence about the pre-eminence of private rented accommodation in rural areas.
If a landowner received roughly the same money for the land, why would he object to accommodation being for rent rather than for sale?
The values that accrue to land for those use categories are significantly different. Even in the wider category of residential development, land values can be adjusted to reflect the development's end use.
So landowners do not object to rented homes but to lower land values.
I suggest that the attitude is driven by the land values that accrue from a development appraisal.
The key issue for landowners is clarity. Landowners talk to each other and want to achieve the same price for land as their neighbours received, but that land might have been sold 10 or 15 years ago, when the planning regime was slightly different. Now that we have PAN 74 on affordable housing, everybody knows that affordable housing is a requirement—a material planning consideration—that will be levied at a rate of about 25 per cent throughout Scotland. The problem is that the planning advice note does not set out in detail the mechanism for delivering that 25 per cent provision.
You are really moving on to commuted sums.
Some local authorities ingather commuted payments in lieu of affordable housing.
Yes—developers can buy out their responsibility for building affordable housing.
That is a blunt way of describing the arrangement. I tend to agree, because the key issue for registered social landlords and housing associations is obtaining land. When aggregated, the commuted sums do not allow those bodies to compete to buy land on which to build houses. So, all that we see happening across Scotland—Aberdeen city is a good example—is a massive pot of commuted-sum money but no land to buy and no houses to build because there is no land for them.
The commuted sum is popular with the developers.
The commuted sum is popular with developers because it gives clarity to a landowner and it overcomes some of the negative perceptions that our customers have about integrated housing sites—perceptions that we, as house builders, do not share. There is still a residual negative perception about mixed communities.
Commuted sums are also used by planning authorities and RSLs in the context of smaller developments where one or two properties could divorce from the body of the estate, which would not be most advantageous to them in terms of the operation of their business. Often, the requirement for a commuted sum to be paid in lieu of on-site provision is driven by the planning authority and the RSL concerned, not necessarily by the needs of the developer.
You do not think, however, that the commuted-sums system works in delivery of affordable housing, because it ends up with there being lumps of money that cannot be used to purchase the necessary land.
The weakness of the commuted-sum system is that the development industry pays a sum to dispense with its obligations on a particular site, but there is no on-going commitment or obligation for that money to be spent on the task in hand.
It is quite an important mechanism for small sites, as Jonathan Fair says. In fact, the appropriate planning advice note sets the threshold at 20 units. Housing associations do not really like to manage fewer than five units in a development, and the commuted sum is a useful tool for just getting some money in and allowing a development to proceed. Housing associations find larger developments easier to manage.
Some local authorities apply the mechanism to developments that are smaller than 20 properties.
They do, but I am not sure that housing associations want one house here and one house there across their areas.
Let us return to SPP 15 and Bruce Walker's comment that the guidance directs development to urban rather than to rural areas. Is not enough land zoned in rural areas in local plans under the current guidance, or is the problem beyond that, with interpretation of the guidance?
I think the problem is twofold. There is a quantum argument that sufficient land is not allocated anywhere. When it comes to the distribution of that land, there is less-than-satisfactory allocation in which too much development is diverted to urban locations for reasons of planning gain.
Do you believe that the current guidance permits enough land to be zoned, but that that decision is not made by politicians at local level?
That is a fair comment. We have a bottom-up approach to housing allocations and we lack a bit of top-down direction to ensure that we meet a strategic Scottish target. "Firm Foundations: The Future of Housing in Scotland" sets a target of 35,000 houses per year. I guarantee that if it is left to the 32 local authorities, they will fall way short of the target.
Your members are builders, as are you. Are you interested in developing small parcels of land scattered around rural Scotland? We will talk about affordability later. Is there a cut-off point after which you are no longer interested in small pockets of land that have been zoned, or is that a misconception?
No. Homes for Scotland has a wide range of members, a significant number of whom are actively involved in smaller-scale developments. A number of them are developing two to four properties per annum, for example, and are active in rural areas, so there is no lower threshold below which Homes for Scotland is not interested in the land. We recognise that the vast majority of current housing provision is focused on urban zones. However, the adequacy of land supply and the adequacy of the definition of housing needs are issues in both urban and rural areas.
You perhaps heard me ask the previous panel about the idea of having a special use class for affordable housing. It has been argued in evidence that to have within the planning system a separate use class that would allow land to be zoned purely for affordable housing might bring benefits to that market. What is your view?
We do not subscribe to that view. We think that the current system, which recognises development for residential purposes, is adequate, given the clear guidance in PAN 74 and the definition of five types of affordable housing. It would be useful for local authorities, and for planning authorities in particular, to recognise the value of different types of affordable housing within that mix. There could be an argument for stronger planning briefs for particular sites, where a planning authority might express a desire to have a certain mix of development in response to properly defined and evaluated housing need and demand analysis in that area. We would support that.
You might have heard in our previous evidence-taking session with the SRPBA the suggestion that stronger powers—primarily compulsory purchase orders—could be employed against landowners who are totally recalcitrant or unwilling to release land for affordable housing. What is Homes for Scotland's view of that suggestion?
We should draw a distinction between landowners and house builders. On occasion, they can be one and the same, but often they are not. In the context of rural development, there is obviously a great deal of public commentary about the action or otherwise of large estates or people with significant land holdings in areas where two or three homes would be sufficient to respond to the affordable housing needs of a town or village. Local authorities have CPO powers but have traditionally been reticent about using them. Compulsory purchase powers have to be part of the mix in circumstances where ransom strips are being held or there is a clear housing need and no alternative way of meeting it can be found.
You said that CPO powers could be part of the mix. What else would you throw into the mix?
I argue that, in the context of the planning system, if you have additional land allocated in an area, you create and introduce competition to the land market and provide alternatives for people in the allocation of sites and the provision of affordable housing. Where competition exists, people will take a different view of the asset value that they might be protecting. If competing sites are made available legitimately, there is less of a driver for people to protect a singular asset interest.
A few months ago, you had some fairly strident comments to make about the way in which the planning system was working—or not working, from your point of view—in the Borders. Will you highlight what you see as being the key barriers to increasing the supply of housing in the Borders, which you believe is necessary?
In the press release to which Des McNulty referred, we said that in the Borders there is a requirement to justify significant public infrastructure investment in order for certain levels of development to proceed. We were drawing attention to the fact that commitments that had been made, or economic assumptions that had been used to justify the investment, had yet to be delivered. That goes to the heart of the matter in respect of delivering affordable housing provision in Scotland. Delivering affordable housing is not the same as allocating sites within development plans or local plans.
Can I get you to be a bit more direct, which you were in your press release? What is Scottish Borders Council doing that is not right in relation to its obligations on housing consents and infrastructure commitments?
The criticisms centre around the speed with which consent is given and the degree of certainty, which Bruce Walker alluded to earlier, that developers who want to invest in the area can place on timely decisions to allow them to propose what are in some cases multimillion pound investments in infrastructure. Even in an ostensibly rural local authority area, there are key urban zones, and there is an important distinction to make when we talk about rural development. In rural areas there are rural-urban and rural-remote solutions, which may be very different. There is a need for significant investment in towns such as Peebles, Galashiels and Kelso, and the building industry can have the confidence to make such investments only if timely decisions will be taken.
I will turn that question around to balance out the discussion. Are any local authorities in Scotland getting it right? I know that you would not describe them as perfect, but are there any to which you would point as examples of better practice?
Do you mean in their processing of planning applications?
Yes. Jonathan Fair has commented on issues relating to Scottish Borders Council. Are there councils that handle things rather better, whether through a faster planning process, better engagement with you or whatever?
There are. My sites acquisition programme is often decided on the basis of which local authorities I am dealing with, and I obviously identify a greater number of land acquisitions in the areas of the speedier councils. A good example is West Lothian Council. It has an extremely efficient development control department, partly because it has secured from its membership extensive delegated powers. There is a direct link between planning efficiency and delegated powers—members will probably not be surprised to hear me say that.
So, the answer is to remove the democratic input.
Well, obviously—
That is a serious point, because you are in effect saying that reduced democratic input makes things more efficient from your point of view.
That seems to be the way that planning legislation is going, in that there is the suggestion that any development of less than 100 houses will be dealt with under delegated powers, with the potential for it to be brought in front of a local review board of three to five members if the applicant is aggrieved with a decision. Planning legislation is pointing us in that direction; it is not just me saying that.
I can give the committee another example of two authorities that are setting useful precedents, particularly in the context of commuted sums. Aberdeen City Council and Aberdeenshire Council are working together on the appointment of a planning gain co-ordinator. We as an industry body and our members who are active in the north-east have been able to engage with that individual and seek clarity on the requirements for commuted sum payments for certain activities across both rural and urban settings. That has brought a great deal of certainty to our members in taking decisions on investments that they want to propose. That is a good example of two authorities taking a slightly different approach to what is usually a fraught process.
What would "affordable" be for an average person living and working in rural Scotland who wanted to buy a house?
Frankly, that is an impossible question to answer because what "affordable" means to one person will be completely different from what it means to someone else. The definition depends entirely on the circumstances of the person concerned. Given the variety of affordable housing that is available across Scotland, which ranges from rented accommodation to shared ownership and discounted properties, it would be foolhardy to hang on a single definition of affordable housing. What is affordable depends entirely on a person's circumstances.
Given that the average person earns less than £30,000 a year and that a sensible mortgage is three times one's salary, a house that costs £100,000 or thereabouts would seem to be affordable. How many houses in that price bracket has your organisation built over the past year?
I do not have that statistic to hand.
Could you provide us with that information?
I am sure that I could give you a flavour of it if I inquired among our members.
I would guess that you have not built many houses in that price bracket.
I do not know what the number is. Setting arbitrary levels of affordability or giving arbitrary definitions of what is affordable can be quite problematic.
It is an extremely important question. The wages of people who live and work and want to buy houses in rural Scotland tend to be lower than average.
I agree.
The houses that you are building in my constituency, which is a rural constituency, range in price from £170,000 to £500,000. They are not affordable. What obligation do developers have to build houses that are affordable to the average person in Scotland? Notwithstanding the fact that any definition of affordability is arbitrary, given the figures that I have mentioned, what proportion of the housing that you build should cost less than £200,000?
Does the local authority for your constituency have an affordable housing policy?
I am not interested in the local authority or housing associations. I am interested in people's right to buy a house that they can afford on the salaries that they earn. What is your role as developers? Should you not put something back instead of squeezing as much money as possible out of the housing market?
I asked that question because it relates to the whole ethos of the planning advice note. Provided that a local authority has done a housing needs assessment and has rolled out an affordable housing policy, it can secure 25 per cent of development sites for affordable social rented housing for the people you are talking about.
You are missing my point. I am not talking about social rented housing; I am talking about houses that people want to buy. As a developer, what obligation do you have to provide houses that people can reasonably afford to buy? I think that you are saying that you have no such obligation and that you do not want to have such an obligation.
I completely disagree with that statement. Bruce Walker was trying to make the point that developers have an obligation to turn over a quarter of the area of their sites to affordable housing. As I said earlier, the PAN 74 definition of affordable housing includes discounted homes for sale and homes for sale that are, by their nature, inherently affordable.
I would like to see some evidence that local authorities are turning down applications for private housing developments that would involve the building of houses that would cost less than £200,000. That is an extremely serious accusation, which we would want to explore.
I would be delighted to provide that to the committee.
You can provide us with examples of such cases.
They are well documented. I would happy to provide such information to the committee.
We would all find that useful.
I will move on to the unplugged house idea. I have two points. You said that whereas some developers are happy to build two or four houses, many developers want to build 50, 100 or 200 houses. Thinking about those who are happy to develop two, three, five or 10 houses, what difference would it make to your ability to develop and to bring costs down if local authorities took a different approach to the zoning of land that is not close to established water and sewerage services and allowed the development of smaller portions of land that are unplugged from public infrastructure? Would it make a lot of difference if you had more latitude?
We have noticed a trend, particularly in the past five or six years, whereby the minimum acceptable standards and specifications that Scottish Water, SEPA and other public infrastructure providers will accept or adopt are raised all the time, particularly in the context of drainage systems and surface and foul water treatment. Those urbanised standards might not be appropriate in rural areas, particularly in remote rural areas. That is not to say that they are irrelevant or can be ignored, but they might not be entirely appropriate in those locations. Some additional flexibility is required to allow people to come up with equal performance measures of different specifications—ones that are more appropriate to the norms in rural areas. That would help our members as they try to respond to the agenda.
So you believe that a different, more liberal approach would generate more interest in the development of housing and would therefore produce more housing supply.
Yes, I think so. That is particularly true in the context of roads engineering and the like, because that has a significant impact on the density of development and on the continuing costs of maintenance and upkeep.
I return to a point that the convener raised with the earlier panel. Do local authorities anticipate the way in which standards are applied when they zone land? Do they think, "This land isn't near to water or sewerage, so SEPA is likely to object and Scottish Water is unlikely to supply it. We won't zone it"? Alternatively, is it the case that they zone the land, and SEPA, Scottish Water and the electricity and roads people then apply conditions to the development that make it impossible in practice? Do local authorities anticipate the way in which things will be interpreted?
In my experience, there is little engagement with SEPA and Scottish Water in the development planning process. Local authorities allocate land without input from SEPA or Scottish Water. The position is improving, but I can give an example of that lack of engagement. Four hundred houses have been allocated in a semi-rural location to the south of Forres, but we recently received correspondence from Scottish Water that suggests that, without substantial investment, the waste water treatment works can accommodate only an extra 44 units. It would have been useful if the local authority had known that when it allocated the land, because it could have allocated less land or tried to address the problem earlier in the process. The information came out only as a result of a consultation on the planning application.
That is pretty astonishing stuff. To what do you attribute that?
Ultimately, there is no obligation on local authorities to work with or co-ordinate their land allocation policies with public infrastructure providers. The two do not have to align their work and it is not common for that level of engagement to occur when public infrastructure providers are completing key infrastructure planning. They do not always align their expected plans for facilities or future funding with the land allocations in the local area. However, there are some notable exceptions to that rule. A number of local authorities in Scotland are engaging with and co-ordinating their planning regimes with the likes of Scottish Water, which has created a number of co-ordinators whose purpose it is to do that very thing. That has made a noticeable difference to the incidence of the problem.
So two things might be going on. In some cases, such as the one that Mr Walker gave as an example, local authorities are zoning large bits of land for potential development, but developing the land requires huge public infrastructure spending—
Or substantial developer contributions.
In other cases, it might be that local authorities are not zoning land because they anticipate that Scottish Water or SEPA might have difficulties, so the land does not get zoned in the first place. Is that conceivable?
That is possible, but they also have a responsibility to implement the requirements of the relevant structure plan, so they could not defer zoning for too long. They have to grab the cudgel and allocate land.
I was interested in the Forres example. I see nothing wrong in principle with an authority zoning land and saying to a developer, "Well, if you want to develop this land, you'll have to make a pretty substantial developer contribution to putting in additional waste water treatment." That seems to me to be the burden of the existing arrangements.
Yes. I do not have a problem with that. The difficulty is that the timing is a bit after the event. If we fund the waste water treatment works, we have to think about how long it will take to set up and commission the works, which might not be commensurate with our development programme and our contractual obligations for the land. We are concerned about timing.
Another aspect is that what is being sought is developer contributions to the investment programmes, not the entire funding of the infrastructure. The developer may be willing and able to make a contribution at an early stage, but the match funding from the coffers of the public infrastructure provider concerned may not be in sequence with the developer's contribution.
I have two questions on slightly different aspects. What effect will current fuel prices have on the demand for affordable rural housing near to and, indeed, distant from larger conurbations?
I must be honest and say that I am not aware of evidence that would allow me to give a sensible answer to that today. It is clear that increased fuel costs have a significant impact on rural areas, compared with urban zones in which people have public transport alternatives. Many people in rural areas, particularly those in remote rural areas, have no form of public transport at their disposal, even if they wished to use such transport.
How could public funds be used more effectively in rural areas to increase the supply and quality of affordable housing?
As we have noted already in this evidence session, we are of the opinion that a greater use or recognition of the value of other types of affordable housing provision in the planning system and the behaviour of local authorities would allow a significantly increased range and number of affordable housing properties to be provided in rural areas. That could be done with no reference to public subsidy at all, which is of course the most effective use of public funds.
The SRPBA said that there was a huge lack of knowledge in the private sector, particularly among landowners, about how to create those sorts of developments. Do you concur with that view and with the view that more information should be made available?
Certainly, we made great strides in providing information and other material to our members about interacting with registered social landlords and, indeed, with Communities Scotland, prior to its demise. Bruce Walker can talk from a practical point of view about issues in the development programme with which he is engaged.
Jonathan is right—it is about a mosaic of provision. We build between 24,000 and 25,000 houses a year, so if the PAN 74 benchmark is adhered to, that amounts to about 6,000 affordable houses per year. It is unrealistic to expect all those to come through the social rented sector to be delivered by housing associations—I do not think that there is the funding to do that. That is why we must have a mosaic of provision. Perhaps we should offer some discounted market housing, secured through homestake, via a housing association or by a developer retaining a golden share. That would ensure that housing is available to buy at below market value, which might address some concerns that were raised previously. We must not adopt a one-size-fits-all approach.
So what is needed is better implementation of PAN 74.
PAN 74 sets out the criteria and the hierarchy of provision. It is an excellent planning advice note—we just need more clarity on how it will be implemented.
We also need consistency of approach across Scotland.
Indeed.
Definitely.
I have a slightly more general question about the extent to which developers look into the future when they plan their building. I represent one of the Perthshire constituencies, and to some extent I have had the same experience as Karen Gillon. I am slightly puzzled by the fact that private developers prefer to build houses of an enormous size—with four or five bedrooms, three bathrooms, two public rooms, double garages and so on. In southern Perthshire, such houses seem to be designed specifically for central belt commuters to buy—that is the basis on which they are built. Are developers thinking 15 years ahead, to a time when all the baby boomers want to downsize? I have an amazing image in my head, because at that point, with the countryside full of five-bedroom, three-bathroom houses, there will be nowhere for the baby boomers to downsize to.
Bruce Walker will address the land aspects of the issue and the impact that valuation processes have on the mix and range of solutions on a site. I will address the issue of demographics and the influence of the market. Housing developers respond to market demand. It is not in their interest to construct homes that they cannot sell. When they plan new projects, they are acutely aware of what the market demand in a location is.
Right now?
Right now, they are thinking about the market demand for projects and/or sites that they are looking to plan or for which they want to enter into land purchase agreements. However, if it takes three or four years to convert interest in a location into handing over the first set of keys to a consumer, it is extremely difficult to look to the future with certainty and to understand the implications of changing market conditions, because that is a long window. The process is driven by the time that it takes not just to get through the planning system but to secure all the other consents that follow. It is true that the trend in Scotland is for the number of people who are living alone to increase; the fact that we have an ageing population means that there will be an increase in the number of people who, ultimately, will have no family commitments. I expect that in future our members will adjust the mix of development—the type of homes that they provide in a location—to reflect those market pressures.
However, the process is quite tightly tied to a timescale of a couple of years.
Yes, because the market may move significantly within a two or three-year window, as we are seeing now. Interestingly, because land is the only factor of production in house building that has risen by a factor of three to four over the past 10 years, there has been a trend towards increasing density in urban areas—an increase in the use of flatted development—as a means to justify the level of land price that is required to secure sites in the first instance. In other words, for developers to secure their raw material—the land—they have to be able to find a way to offer a figure that is a suitably attractive to the landowner. The most straightforward way of doing so is to increase the density of housing on a given area. That is why a significant range of developments has made large use of two-bedroom flats or particularly dense urban development. It is driven by the requirement for land.
Jonathan Fair stole my thunder a wee bit on that last point. Land supply being rationed in the way that it is creates an extremely competitive environment in bidding for sites, and it is not unusual for there to be 35 or 40 offers for a site. It is all about square-footage, as we say in the industry: the greater the square-footage of accommodation that a developer can get on the site, the more likely they are to win it. The outcome of that is four and five-bed detached houses, because they generate the most square-footage. If local authorities were more prescriptive about what they wanted on sites through their development control standards or their development briefs and applied that policy consistently, we would automatically have to adhere to that and adjust accordingly. However, we always have the landowner in the background who wants £1 million an acre for his site because farmer Giles down the road got that five years ago.
That has answered our questions on small-scale developments as well. I thank you both for coming. As always, we may follow up your evidence with a request for clarification or other questions. Equally, if there are further points that you wish to draw to our attention, that would also be useful. In response to Karen Gillon, we explored some matters on which you will come back to us with further information.
Meeting suspended.
On resuming—