COMMENT The political tide in Scotland is turning. This shift was echoed by Anas Sarwar, the leader of Scottish Labour, after stating it could “lead the way and deliver a UK-wide Labour government”.
While there have been signs of the Scottish National Party’s shrinking influence for some time, the shock outcome of October’s Rutherglen and Hamilton West by-election – a swing of 20.4% from the SNP to Labour – reaffirmed the changing political mood.
Though it is important not to read too deeply into one by-election result, those operating in Scotland’s real estate industry should prepare for the possibility of changes in government.
A recent poll carried out by Savanta revealed Labour could replace the SNP as the largest Scottish party in Westminster. At the time of writing, Labour also remains well ahead of the Conservative Party in the polls when it comes to national parliament voting intention.
The picture will continue to change in the build-up to the next general election, which is due by January 2025. What is certain, however, is that housing will be a key political battleground.
So with the rise of Scottish Labour or even a UK Labour government now a real possibility, Scotland finds itself at a turning point – one that could alter how its residential sector operates in the future.
“How, not if”
Housing and land use planning is a devolved matter in Scotland. This means the Scottish government has power to make decisions and legislate on issues, as long as these policies do not conflict with overarching UK law, known as “reserved matters”.
Scottish Labour is already aligning itself with the party’s broader vision on housing delivery, stating that a UK Labour government would oversee “the most radical, and the largest, housebuilding programme since the war, investing to build over a million new homes”.
This follows Labour leader Sir Keir Starmer unveiling his “How, not if” vision, in which he pledged to reform the planning system and build 1.5m homes over the next parliamentary term.
Similar to the current government, Labour has promised to embrace a brownfield-first approach to residential development – floating a fast-track approval process for schemes on brownfield sites. Proposals could also see increased building on the “grey belt” – sites that may be within the green belt, but are disused, such as wasteland or unused car parks.
Delivering viability
While more detail is awaited on a potential “blitz of planning reform” and introduction of “new development corporations”, Labour is making bold commitments on housing. Promises that must also be seen in the context of the current market – inflation and interest rates continue to pose challenges to development and home sales – and the residential landscape in Scotland.
One key point to consider is how plans to ramp up housing delivery, including potentially utilising the grey belt to create “Labour new towns”, would work in Scotland.
Transport infrastructure remains one of the main barriers to residential development outside Scotland’s main city hubs. The successful creation of new communities and development on the grey belt therefore depends on the appetite to simultaneously deliver greater connectivity.
The country’s train services have been nationalised, and new investment in the network will be essential. This also applies to Scotland’s ferry fleet where upgrades are required.
If able to successfully expand Scotland’s transport network, while making it more resilient and accessible, the potential to unlock new residential development is huge – not only in cities and urban centres, but also more rural locations, including Scotland’s islands.
Potential implications
A shift in power to Labour could have other potential implications for those operating in Scotland’s residential sector.
Similar to the SNP and the impending Housing Bill on which it is currently consulting, Labour has also called for greater protections for renters. Potential measures include eviction bans, rent caps and support for those in arrears.
This would follow the Cost of Living (Tenant Protection) (Scotland) Act 2022, which was introduced in Scotland in October 2022 and recently extended to March 2024 – providing a temporary rent freeze and moratorium on evictions. Some form of permanent rent control therefore seems inevitable regardless of whether Labour gains a majority or the SNP holds on to this.
There have also been suggestions of a revamped Mortgage to Shared Equity Scheme whereby the government provides capital support to help lower mortgage payments if homeowners are facing arrears. This already exists, but there have been calls from Scottish Labour to amend it to make it more accessible – increasing the property value for which it can be applied and the amount of equity that the homeowner must have in the property.
Other potential changes include establishing a 100% council tax surcharge on second homes and proposing council tax rises for dwellings that have been left empty, potentially enabling councils to purchase neglected houses and sell them for as low as £1.
While it is uncertain whether these proposals would materialise under Scottish Labour, there are clear alignments with UK Labour’s wider stance, particularly on tenant protections. This is just one of the reasons that businesses operating in Scotland’s residential sector must continue engaging in discussions on policy as we approach the next election and beyond.
Regardless of which party secures power, change is coming. It is vital for the country’s real estate industry to recognise and prepare for this, ensuring its active involvement in shaping housing and planning policy to viably deliver the high-quality homes that Scotland needs.
Lyndsey O’Connor is a real estate partner at Shoosmiths
