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Monday Interview: Philip Hogg, Homes for Scotland

Philip Hogg is hoping Homes for Scotlands efforts can help get the construction industry back on track. Picture: Julie Bull

Philip Hogg is hoping Homes for Scotlands efforts can help get the construction industry back on track. Picture: Julie Bull

  • by TERRY MURDEN
 

FROM youthful aspirations to be an architect to a career in the construction industry, Philip Hogg has, metaphorically speaking, built a career in building. He studied the subject at college, went on to work with Miller Group and for the past two years has led the lobby group Homes for Scotland which puts him in touch with the levers of power.

His role as the group’s chief executive is to represent its 200 members and right now they are demanding the Scottish Government digs deep and finds more money for the Help to Buy scheme, a government initiative to stimulate the housing market. Hogg knows that it is an uphill battle and admits the scheme was a victim of its own success – the £100 million budget for the year beginning in March has already been allocated.

“While we were delighted that Help to Buy got the market moving it has already run out of cash,” he says. “Another £100m has been allocated, but not until next year, so if you want to reserve a home and move in next April you can apply now.”

He acknowledges that this is not likely to happen, though the point is a serious one. His job entails educating those in power about how the industry operates long term and how that requires equally long-term support. Help to Buy “took the market by storm”, he says, but because it proved so popular it contributed to the spike in demand for new homes which created another difficulty. There is now a shortage of bricks.

“The market generally has improved and there has been a lot of pent-up demand, but the industry faces the problems of the proverbial oil tanker – it cannot be turned around quickly. This interruption to funding is causing problems for business planning.”

Homes for Scotland got in early on the need for some form of assistance for homebuyers, particularly first-time buyers, who could not afford the deposit for a new home. It came up with MI New Home, a Scottish Government-backed guarantee scheme enabling lenders to offer up to 95 per cent mortgages sold by participating builders, against 75 per cent under Help to Buy.

Though both schemes require a 5% deposit, because the latter required a smaller mortgage (and therefore lower monthly repayments) due to the 20% underwritten by the government, Help to Buy has effectively led to a fall in demand for MI New Home. However, the scheme is still available and has the attraction of giving the buyer a larger stake in their home.

“It has helped get 750 buyers on the homebuying ladder who would not have been able to do so, and it also helped the overall market,” says Hogg. “But it is a three-year scheme due to end next year. In England, Help to Buy has been extended to 2020 which gives greater certainty to the big housebuilders who are looking at where to buy land and build homes. In Scotland they cannot look beyond 2016.”

Hogg, from Worcestershire, worked in the ceramics and home furnishings industries before moving to Scotland in 1998 when joined Miller Homes as UK marketing director. After Miller, he spent a short time in the Middle East and took over at Homes for Scotland two years ago, succeeding Jonathan Fair who moved to Stewart Milne.

“It is the ultimate consumer product,” Hogg says, describing his interest in the building sector, before jokingly correcting himself. “Well, maybe the car industry is more aspirational, but homes are still fascinating.”

Now 50, he has not lost his zest for getting things done. The bottom line is that too few houses are being built – only 15,000 in Scotland last year against industry estimates of 21,500 that are needed. This is smothering activity which could create jobs and is adding to price pressures.

Hogg says: “The industry hit the real depths of recession four or five years ago. The statistics tell it all. We had the lowest number of homes built since 1947. In the context of a growing population and people moving home, we are totally out of kilter. The Scottish Government acknowledges the need to build homes, it is the ‘how-to’ that is the real challenge.”

The initiatives outlined above have helped, and Homes for Scotland is about to hire a “champion” for the private rented sector, a role that will try to encourage more institutional investment and bring the various stakeholders in the sector together.

A broader issue is the shortage of what the industry terms “effective land” – land that has some commercial benefit. Only six of Scotland’s 32 local authorities have the required five-year effective land supply. Hogg says: “We need a 100 per cent increase in effective land. There is no point having a piece of land for housing if it lacks infrastructure or needs a lot of remedial work.”

Too often, he says, local authorities will tell developers they have allocated certain land that will accommodate the housing they need. But it may not meet developers’ requirements in terms of the types of homes they want to build or the numbers they believe they can sell in that location.

“Sometimes there can be a lack of understanding by local authorities about the commercial realities of a site.

“There is a pinch point where planners are under pressure from developers to release land they want and facing resistance from local communities … You can understand why decisions can take as long as they do.”

 

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