Accelerating home-building in Scotland

A plan-led, infrastructure first approach

National Planning Framework 4 (NPF4) takes a plan-led approach to development. The plan-led approach supports “infrastructure-first” implementation of development and gives greater confidence and certainty to developers and local communities.

It is very important that local development plans (LDPs) are brought forward by planning authorities for each area as soon as possible. We are aware that delays are being projected by some planning authorities, with the preparation and adoption of several LDPs taking longer than anticipated, beyond the May 2028 expectation. We have also heard views from the housebuilding sector that the supply of land for housing is declining in advance of new plans coming forward. 

NPF4 policy has been designed to accelerate build-out, with provision for additional land to come forward where it can be demonstrated that delivery is faster than anticipated. New LDPs and their associated delivery programmes are required to set out the pipeline of land and establish a clear path to delivery. Housing Land Audit Guidance aims to promote a more consistent approach to programming of the land supply.

As per a joint letter from the Cabinet Secretary for Housing, and Minister for Public Finance, sent to all planning stakeholders on 2 September 2025, Ministers expect an emergency-led focus to be applied to decision making in LDP preparation and on planning applications.

Some industry stakeholders have called for the reintroduction of a “presumption in favour of sustainable development”. Research undertaken in 2020 suggested the number of permissions given where this was a key factor in decision making was limited to between around 5500 to 8000 units over 5 years. Of these it was estimated that just over 1000 homes were built over the same 5 year period. Around half of the permissions granted under the presumption were reported to be located in the Edinburgh City Region, with the remainder in East Dunbartonshire, North Lanarkshire, Falkirk and Stirling. There was also significant debate about the meaning and application of “the presumption”, generating significant delays and absorbing significant time and cost for all parties in the planning system.

In view of this, and given the scale of consented land which is already available, we would need further evidence to be persuaded that introducing an interim policy such as a “presumption” will lead to faster build-out. Delivery of homes, at a faster pace, is our primary objective, rather than adding to the volume of un-implemented permissions.

What is the problem?

Housing completion rates vary over time – annual data shows that new housebuilding levels returned to pre-COVID-19 levels in 2022-23, with a decline more recently. There were 18,347 homes completed and 14,846 started in the year to the end of September 2025 – a reduction of 8% and 5% respectively from the previous year. Social sector starts and completions particularly reduced during this period, although the private sector homes completed reduced to their lowest level since 2018, and starts were the lowest since 2013.

Several factors influence the number of homes which are built each year. Although “planning” can often be cited as the primary reason for delays, following a grant of planning permission, significant barriers to delivery often remain.

In mid-2024 we made a high-level estimate that planning permission is in place for at least 164,000 homes which have not yet been built. This is a living pipeline of land, reported in local authority Housing Land Audits, which can be updated as new audits are published. It is a broad estimate which does not take into account or reflect the deliverability, constraints or programming of these sites.

We have noted that housebuilders consider this number to be lower once deliverability is factored in, and in particular whether sites are in the hands of housebuilders.

In the meantime, we have identified and addressed stalled housing sites, with the support of a Short Life Working Group, involving Heads of Planning Scotland, Homes for Scotland, the Scottish Federation of Housing Associations and the Scottish Property Federation. Members of these organisations asked their members to highlight housing sites which they considered to be stalled – ranging from those where planning permission has not yet been sought, to legacy sites which have had permission in place for some years but which are not progressing.

Strategic actions were identified by the Short Life Working Group to address a range of broad issues where potential action would benefit multiple sites. The issues were found to be fundamental and longstanding in stalling delivery of development sites. They are complex and difficult to resolve rapidly when approached at site level, and there is no one solution to resolve matters for all sites quickly.

This work, together with wider research, has shown that the key factors influencing development rates can be broadly summarised as follows:

• Absorption rate, viability and business choices: Sites that are available to housebuilders, are often not considered to be viable given costs and market assumptions around returns. Sites in more challenging market areas are particularly affected. As reported by the Competition and Markets Authority (CMA) in 2024, the market “absorption rate” also drives the pace of delivery – in many cases limiting the rate of development significantly. Whilst planning permissions are generally time-limited, once construction has commenced the programme for delivery can be extended. Higher interest rates and inflation in the cost of labour and materials must also be factored into this calculation.
• Risk and liability for the public sector: Compounding this, it is reasonable to expect that the more land that has planning permission in place, the more reluctant some local authorities may be to support additional applications, particularly where substantial existing consents are not being built-out. They need to take account of potential additional infrastructure costs and risks to associated resource budgets. Risk appetite, ability to accommodate these pressures and commensurate attitudes to development, varies between authorities.
• Capacity and motivation of the applicant: Planning permission may be sought but without clear commitment to progressing development in the foreseeable future. The new approach to LDPs, with a greater focus on deliverability and overcoming constraints to development, may help to address this. In the meantime, there appears to be a legacy of land with consent which is not being built out, and with uncertain programming.

The gap between the number of homes being consented, and those which are subsequently built, creates significant inefficiencies for the housing delivery system as a whole. Planning authority resource is used to determine planning applications which may or may not result in homes being built on the ground.

The SME housebuilding sector has made us aware of particular challenges that it faces. The CMA study into housebuilding across the UK reported a significant drop in the number of active SME housebuilders since the late 1980s.

Industry feedback suggests that the challenges described above can be more acute for businesses operating at a smaller scale, with less geographical spread and therefore resilience to market changes. In addition to this, SME housebuilders are more likely to deliver on more specialist rural and brownfield sites. These types of sites present particular challenges in respect of site preparation and assembly, and mitigation of development impact.

Previous recommendations and potential solutions

This is not a new set of challenges. In 2016 the Independent Review of the Scottish Planning System made 48 recommendations for improving the planning system, with five specifically focusing on housing delivery. This included setting targets in the NPF, defining “effective” housing land, zoning investment-ready land and mechanisms to assemble land and service sites. Reference was made to land reform, including a land value tax, majority land assembly, compulsory purchase orders (CPO) and compulsory sales orders (CSO). The review also promoted more diverse housing provision through a plan-led approach. 

In 2018 the UK Government published the report of an Independent Review of Build Out (“The Letwin Report”). It found that large sites take on average more than 15 years to develop. The review concluded that the lack of diverse types and tenures of homes limits the “market absorption rate” and therefore the speed of build-out. Recommendations focused on diversifying supply particularly in large sites in high market areas, funding to improve viability, and more powers for local authorities to compulsorily purchase, masterplan, service and develop sites.

The Scottish Land Commission undertook a 2 year study of land and housing delivery issues and made recommendations for addressing them. These include the use of public land, regeneration zones, land value capture, a new public land agency, and greater transparency on conditional contracts over land, so that sales prices are better understood.

The Scottish Land Commission has explored how a public sector-led approach to development could work in practice, and recommended measures to facilitate this. These include the need for substantial up-front investment in infrastructure, with public sector participation to secure public benefit. Such investment is recoverable and can assist with cash flow and risk. Examples of this included Bertha Park in Perth and Kinross, where transport infrastructure was delivered upfront through capital investment by the council. The study noted that this depends on risk appetite and alternative routes may help to broaden its appeal, such as bonds and guarantees to share risk.

In early 2024, the CMA reported on a study into housebuilding across the UK, to better understand why, and what can be done about  “too few houses …being built, especially in areas in which they are most needed, which is having a negative effect on affordability.” The study found that between 2014 and 2023, the number of homes given planning permission in Scotland annually had increased significantly above the level of completions and assessed overall housing need. The CMA noted that housebuilders tend to build at a rate that is consistent with the local “absorption rates” to sustain a higher price. As well as providing options for streamlining planning, the study suggested that “the Scottish Government may wish to consider reforming the land market or building on existing measures to support increasing build-out rates”. Examples of this were set out, including: more actively progressing land purchase and assembly, setting higher build-out rates in policy, setting build-out rates for housebuilders, together with the use of enforcement powers where rates of build-out are not met.

The UK Collaborative Centre for Housing Evidence (UKCCHE) has also considered challenges with housing delivery, specifically with regard to the Affordable Housing Supply Programme. Its suggestions include making information on sites more transparent, revisiting land value uplift, CSO and land assembly. UKCCHE also considered a recommendation to require public bodies to identify and release more land, factoring infrastructure costs into land values for councils acquiring land, and potential measures to require developers to sell land if they fail to build out sites by a given date or at an agreed rate.

Finally, in 2025 the UK Government consulted on a range of measures which could be deployed to speed up build-out of homes. This noted a similar context and set of challenges as outlined above and set out a range of measures including a number focusing on the planning system.

Ongoing measures to support public sector led development

The Scottish Government recently announced its intention to establish a new national housing agency with a focus on simplicity, scale and speed to enable the delivery of housing of all types, helping to meet housing need across Scotland. The agency will work with and complement, rather than cut across, the statutory planning system. While work is ongoing to design the agency, the issues set out in this paper are likely to be relevant to its intended scope and functions.

As set out in the Programme for Government, the Scottish Government is publishing an Action and Implementation Plan, exploring whether there are regulatory barriers to investment and growth across three key sectors, including housing. This is part of our wider commitment to foster a business environment that supports growth, including subjecting forthcoming Scottish Government regulation to scrutiny to ensure that its purpose, content, and timing have regard to potential opportunities and impacts on business and investment.

The Scottish Government is undertaking a comprehensive review of CPO, with a view to proposals being brought forward for legislative change in the next Parliamentary session. We published proposals for legislative change in the autumn of 2025, and the consultation closed in December. This important tool has the potential to unlock more sites for development, particularly if processes are simplified and made more accessible. The consultation also asks questions on the potential role of CSO to help unlock development potential.

We are also encouraging local authorities to use Masterplan Consent Areas (MCAs) to promote site assembly and frontload planning consent as an incentive to investment in development. This could also help to drive a more proactive approach to public sector-led development, and we will continue to work with partners to support the early adoption of MCAs across Scotland.

Our work on stalled housing sites has included brokerage at the individual site level. Brokerage involves the Scottish Government bringing parties together to identify why individual sites have stalled, consider options and progress solutions so sites are development ready. Brokerage was offered for 10 sites, with 6 being accepted across 4 authorities.

The impact of all the measures proposed will depend on the appetite and capacity of stakeholders, including planning authorities and industry, to move to a more proactive approach, as well as commitment to working in partnership. Whilst some initiatives are already a key part of ongoing planning reforms and work to improve practice, their impact will extend over years rather than months and will require continuing learning and place leadership to directly facilitate housing delivery.

Initiatives to boost capacity and expertise in planning authorities, including the National Planning Hub and the Planning Skills Commitment Plan are ongoing. 

The following section explores options for further action, in addition to these ongoing priorities.