Housing emergency: Scottish building giant demands removal of rent cap barriers to attract investment

“We trust that the Scottish Government will take action to address Scotland's housing emergency,” says Springfield Properties boss.

The boss of the only listed housebuilder north of the Border has called on the Scottish Government to remove rent cap hurdles to help address the housing emergency.

Innes Smith, chief executive of Springfield Properties, commented in a trading update from the Aim-quoted firm that said it is on track to meet market expectations for its financial year ending May 2025.

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He said: "Looking forward, we trust that the Scottish Government will take action to address Scotland's housing emergency, which must include the removal of the rent cap barriers to attract PRS [private rented sector] investment north of the Border. With one of the largest land banks in Scotland, and with a high proportion of sites already having planning in place, [Springfield Properties is] well-positioned to benefit from any resumption in PRS activity, which would represent an upside to our forecasts.”

Rules are currently in place enabling private tenants in Scotland to have any rent increase capped at 12 per cent.

Springfield said revenue for the financial year ending May 2024 is expected to be about £266 million, down from £332.1m in 2023, “reflecting challenging conditions experienced within the housing market”. However, pre-tax profit is expected to be slightly ahead of market expectations, while the group has reduced its bank debt to about £40m as at May 31, 2024, ahead of the targeted £55m.

Smith also stated: "While the challenging market conditions impacted revenue for the year and our private housing forward orderbook, we are cautiously optimistic about the year ahead. Many fundamentals that underpin homebuyer confidence are set to strengthen, including a new UK government, decreasing inflation and an anticipated interest rate reduction. Alongside this, we remain on track to deliver strong growth in FY 2025 in affordable housing, offsetting the expected small decline in our private sales.”

The trading update follows Springfield in February saying it was spying green shoots of recovery in a troubled housing market. The group in September 2023 announced plans to suspend dividend payments and said it had been taking “decisive” cost-cutting measures amid the challenging backdrop and rising debt.

Springfield Properties says it is well-positioned to benefit from any resumption in activity in the private rented sector. Picture: contributed.Springfield Properties says it is well-positioned to benefit from any resumption in activity in the private rented sector. Picture: contributed.
Springfield Properties says it is well-positioned to benefit from any resumption in activity in the private rented sector. Picture: contributed.

Separately, a firm billed as the largest lettings and estate agency north of the Border has also called for action to help tackle Scotland’s housing emergency, and wishes for the nation to match Labour’s housebuilding target.

Property firm DJ Alexander believes Scotland’s government should replicate Chancellor Rachel Reeves’ announcement for a five-year housebuilding target, ease planning restrictions, and support property-developers to build more homes for owner-occupiers and the private and social housing sectors.

The firm said the Labour government’s housebuilding target of 1.5 million new homes would equate to a comparable target for Scotland of around 123,000 over five years, equivalent to 24,600 per annum.

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David Alexander, chief executive of DJ Alexander Scotland and Scotsman columnist, commented: “Although this may sound like a large number, it is not an unrealistic figure. The Scottish government could do a lot worse than emulate Keir Starmer’s housing policy and introduce ambitious housebuilding targets created through a substantial relaxation of planning regulations, with a keen eye on ensuring we have homes that reflect the needs and demands of people from all walks of life, in all parts of Scotland.”

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