Introduction
This document provides an explanation of the new build, Affordable Housing Supply
Programme and Sales statistics published quarterly by the Scottish Government.
Explanation of New Build statistics:
The new build housing statistics measure construction activity undertaken during the
quarter to monitor the new build component of housing supply. The statistics record
the new build activity undertaken, rather than the sales of new build houses. As such
they are not intended to provide a direct measure of housing market activity. Neither
are they a measure of housing tenure. Although the supply of new houses is strongly
related to housing market activity there are many other influences on the housing
market, such as house prices, the availability of mortgage finance, households’
disposable income, buyer confidence, etc which will influence households decisions
to purchase a house.
The housing supply statistics break down new build construction activity into private
sector led, Local Authority led and Registered Social Landlord (RSL) led starts and
completions.
The statistics for private sector and local authority led development are drawn from
local authority administrative systems, while those for the RSL led sector are drawn
from the Affordable Housing Supply Programme administrative system. Further
detail is included in the sections below.
These statistics are not seasonally adjusted, so comparisons with the previous
quarter will include some seasonal effects. As a result figures are often compared to
those for the same quarter one year earlier.
Private Sector Led New House Build Activity:
Private sector led activity includes new house build undertaken by private sector
developers (which will contribute largely to private tenure) and self-build activity –
that is individuals who build, or procure builders to build, a house which is for their
own occupation and not intended for sale on completion. In the year to March 2012,
around 15% of starts and completions were for single house builds.
It is not always clear at the start of a development what the final tenure of the
dwellings will be. Where final tenure is known at the outset, the dwellings will be
included in the appropriate sector. However, where final tenure is not known, they
are included in the sector which is leading the development.
Broadly speaking the majority of private sector development is for private tenure.
However, particularly in recent years, private developers have made an increased
contribution to affordable housing supply through specific programmes such as New
Supply Shared Equity (NSSE), the sale of ‘off the shelf’ homes to RSLs, and other
contributions agreed through the planning system.
Since 2000-01, we estimate that around 5% of all private sector starts and
completions have contributed to affordable housing supply. However, in recent years
this increased to as much as 15%, largely due to an increase in contributions
through NSSE. These are estimates only, and are based on the percentage of
private new build and off the shelf purchase approvals and completions as a
percentage of private sector starts and completions.
Statistics on private sector led new build activity are sourced from LA administrative
systems, based on LA building inspector data. Individual dwellings are included as
they are started and completed irrespective of whether the whole site is completed.
RSL led and LA led New House Build Activity
Both the RSL led and the Local authority led new build activity are, for the majority,
funded through Scottish Government funding programmes. As a result, the level and
pattern of activity are directly impacted by Government funding programmes and any
changes to these programmes. The seasonal patterns of the statistics are therefore
inconsistent across time, as significant changes in the funding programme in 2011
and 2012 have impacted on the timing of affordable housing activity as well as the
level of activity.
For example, in 2011, the Innovation and Investment Fund was introduced. The
cessation of the previous funding programme and the introduction of the Innovation
and Investment Fund meant that there were no approvals in Q3 of 2011, and the
subsequent seasonal pattern of approvals was also different from previous years.
Further changes to the funding model were introduced in May 2012, when councils
received three-year Resource Planning Assumptions1 (for 2012-13 to 2014-15), for
subsidies to the council and/or RSLs in their area, to enable each council to consider
on a strategic basis how this funding should best be deployed. Councils have put
forward to the Scottish Government a programme of social and affordable housing
developments, based on Local Housing Strategies and Strategic Housing Investment
Plans. The Scottish Government is in the process of issuing individual programme
agreements to both local authorities and RSLs based on councils Strategic Local
Programmes. This new process is reflected in the low level of approvals in Q3 2012,
and the seasonality of approvals/starts in future quarters will also be affected, as
may completions be affected at a later date.
1
In Glasgow and Edinburgh, the equivalent system saw each council receiving a 3-year delegated
budget under the Transfer of Management of Development Funding (TMDF) arrangements, instead of
a 3-year Resource Planning Assumption.
RSL led new build activity:
Statistics on activity undertaken by RSLs are sourced from the Affordable Housing
Supply Programme administration system. This records activity on all projects which
receive some form of government funding. These statistics therefore reflect the
implementation and running of the AHSP.
The AHSP statistics record new build approvals, starts and completions, for whole
developments rather than for individual dwellings (or phases of development on
larger developments). Approval and completion are significant parts of the
administrative process, so the data for these should be of high quality, though with
some delays in recording completions. Delays in reporting and recording site starts
tend to be more significant, and as a result the data quality for RSL new build starts
is less robust. Starts are measured when an RSL notifies the SG through the AHSP
programme that a site has started. This may be at any point in the development, for
example when site clearance begins or any point up to the beginning of ground
works for foundations (the point recognised by building standards as the start point
of the build). Additionally, all dwellings in the development are counted as started at
the start of site works (rather than when each individual dwelling is started).
For these reasons, approvals continue to be used as a proxy for RSL new build
starts contained in these statistics.
Approvals for all dwellings on site are included in their entirety at the point the
funding approval through AHSP is granted. This differs from the private sector led
and local authority led series, which count individual dwellings when they actually
start, irrespective of the size of the development.
RSL completions are measured on a similar basis, and are included at site
completion rather than individual dwelling completion. This means the series for RSL
approvals and completions reflects site development and therefore may be more
variable as whole sites are included.
Local authority new build activity
Prior to the 2009-10 financial year, local authority build did not receive subsidy from
the government. Build activity was largely financed through the council’s Housing
Revenue Account, commuted payments received though the planning system, and
LA income sources such as second homes council tax . In 2009-10, the Scottish
Government introduced a system of incentive payments for New Council House
Building, to support local authorities to build a much higher number of new council
homes for social rent. This incentive system has continued, largely unchanged, both
as part of the Innovation and Investment fund in 2011, and more recently as an
integral part of the Affordable Housing Supply Programme from 2012-13 onwards.
Statistics on Local Authority led new build activity are sourced from LA administrative
systems. Starts and completions are counted as activity on each individual dwelling
is undertaken, irrespective of the size of the development.
Considerations:
1. Local Authority level data:
New build data are collected at local authority level. House building is unevenly
distributed both geographically and over time and patterns of housing development
can produce clusters of new houses which can make the trends difficult to interpret
at this level. For example, one or two major developments starting within an authority
will produce an increase in starts as the ground works for each dwelling are started.
Following this, these will drop out of the statistics as starts resulting in a decrease in
the statistics.
The precise timing of when starts and completions are recorded in the statistics often
depends on the timing of building control inspections. Revisions occur in the
quarterly series to allocate starts and completions to the correct quarters based on
information received from the administrative systems. For example, a building control
inspector may not visit a site following completion until the following quarter – the
completions when they are extracted from the administrative systems would be
allocated to the correct quarter of completion resulting in a revision to the previously
published statistics.
2. From start to completion:
A wide range of factors can influence the length of time it takes for a new house to
be constructed. Evidence suggests that on sites built by developers, the average
time to complete a dwelling is significantly less than that for self-build plots.
In general, the number of starts will be a strong indicator of the likely trend in
completions, but there may well be differences over the short and medium term
depending on things such as the housing market, economic climate , and access to
finance. It sometimes appears that an imbalance exists where the number of starts
and completions differ. In Scotland, the difference between starts and completions
tends to be small, with completions being within 5% of starts since 1996. Over the
long term starts and completions will balance out, except for the few occasions when
a new dwelling may be started but never completed. Any shorter term imbalances
can be understood as part of the economic cycle.
3. Seasonality:
These statistics are not seasonally adjusted, so comparisons with the previous
quarter will include some seasonal effects. As a result figures are often compared to
those for the same quarter one year earlier.
For all of the component new build series, and the AHSP series, any seasonality in
the series will be impacted by events which directly affect the sector. For example,
the changes to the funding models for affordable housing supply have resulted in a
shift in the seasonal pattern for both RSL led and LA led new build activity.
Interpretation of the statistics should take into consideration the impacts on the
individual series as noted above.
4. Comparability between the countries of the UK:
Each of the countries of the UK produces its own statistics on New Build Housing.
New build statistics for each of the countries of the UK, as well as for Great Britain
and the UK as a whole are published by the Department for Communities and Local
Government:
https://www.gov.uk/government/statistical-data-sets/live-tables-onhouse-building
All the administrations use broadly consistent definitions for starts and completions in
measuring new build housing. Up to June 2011, all four countries have split the data
into private sector, housing association/RSL and local authority. From June 2011,
this split is no longer available for Welsh starts. In England and Wales, data is
collected from local authority and independent building control companies. Therefore
some housing association/RSL starts and completions can be misreported as private
sector starts as it can be difficult for data providers to identify whether a dwelling is
being built for a housing association/RSL or a private developer. In Northern Ireland
data is collected directly from housing association/RSL administrations, and in
Scotland it is collected from the Affordable Housing Supply Programme
administration system. In Scotland, these statistics refer to sector led development
and not tenure. At the point of building control inspection, the final tenure of
developments may not be known to a local authority building control inspector. Final
tenure may not be known until completion.
While a full response is generally collected for Scotland, Wales and Northern Ireland,
a small portion of the statistics for England are imputed for missing response.
Currently approved inspectors data is included in the statistics for Scotland, England
and Northern Ireland. The statistics for Wales do not include Approved Inspector
data, but the Welsh Administration is investigating to determine the level of activity in
Wales with a view to incorporating approved inspector data if this is found to be
appropriate.
Affordable Housing Supply Programme
The Scottish Government’s AHSP (previously the Affordable Housing Investment
Programme) funds housing for rent and for low cost home ownership. The majority of
funding is provided to Registered Social Landlords (RSLs), although the AHSP also
provides funding to others including local authorities, private developers and
individuals. The AHSP funds both new build activity and other activity to increase
affordable housing supply, for example off the shelf purchases, open market shared
equity (OMSE), rehabilitations and support provided to home owners through the
Home Ownership Support Fund (mortgage to rent and mortgage to shared equity).
While the great majority if affordable housing developments in Scotland are
supported by the Scottish Government through the AHSP, there are also
contributions to the costs from housing associations, councils and the private sector.
In particular, contributions by private sector developers are agreed through the
planning system. Further details of how the planning system supports the delivery of
affordable
housing
are
available
at:
http://www.scotland.gov.uk/Publications/2010/08/31111624/0
The new house build statistics for RSL and LA led development will include the new
build housing delivered through the AHSP, but will also include other new build
housing which is not supported by the AHSP.
The seasonal patterns of the AHSP statistics are inconsistent across time, as
significant changes in the funding programme in 2011 and 2012 have impacted on
the timing of affordable housing activity as well as the level of activity. For example,
in 2011, the Innovation and Investment Fund was introduced. The cessation of the
previous funding programme and the introduction of the Innovation and Investment
Fund meant that there were no approvals in Q3 of 2011, and the subsequent
seasonal pattern of approvals was also different from previous years. Further
changes to the funding model were introduced in May 2012, with the introduction of
Resource Planning aimed at enabling each council to consider on a strategic basis
how this funding should best be deployed. This new process is reflected in the low
level of approvals in Q3 2012, and the seasonality of approvals and starts in future
quarters will also be affected.
Sales of Public Authority houses
Public authorities include local authorities, new towns and Scottish Homes, but
exclude housing associations/RSLs. A number of local authorities have transferred
their housing stock to housing associations/RSLs in recent years. We continue to
collect sales information from these local authorities because the tenants of the
former local authority housing preserved their rights to buy following the transfer.
These authorities are Dumfries and Galloway, Glasgow, Scottish Borders, Eilean
Siar, Argyll & Bute and Inverclyde.
Sales can occur for a number of reasons: right to buy sales to sitting tenants, rent to
mortgage, and voluntary sales. Part III of the Housing (Scotland) Act 1987, as
amended, gives most Scottish secure tenants the right to buy their homes, provided
they are eligible and their home is not exempt. Rent to mortgage sales were first
introduced as a pilot scheme in October 1989 for tenants of Scottish
Homes/Communities Scotland and the New Town Development Corporations. From
1 April 1991 this was extended to local authority tenants. A new statutory rent to
mortgage scheme for all public authority tenants was introduced on 27 September
1993 via the Leasehold Reform, Housing and Urban Development Act 1993.
However, the Housing (Scotland) Act 2001 repealed the rent to mortgage scheme
with effect from 30 September 2002 (this did not affect people already buying
through this mechanism). Voluntary Sales are included under the RTB legislation.
They are made to sitting tenants who do not fulfil the RTB conditions, largely
because they have not lived in a property for the minimum time period necessary to
qualify.
There have been a number of reforms that also impact on social sector sales. The
Housing (Scotland) Act 2010 contains reforms which end Right to Buy (RTB) for new
supply social housing and new tenants and introduce more flexibility and local
control over the designation of pressured areas (which serve to suspend modernised
RTB entitlements).The new supply provision commenced on 1st March 2011 and the
new tenant provision on 2 March 2011. The pressured area reforms commenced on
30 June 2011. The aim of these reforms was to increase the supply of social housing
by encouraging social landlords (particularly councils) to build more housing and by
safeguarding existing stock from sale, whilst protecting the rights of existing tenants.
Further data on Housing Association Right to Buy transactions is published by the
Scottish
Housing
Regulator
on
their
website
at:www.scottishhousingregulator.gov.uk
The Scottish Government Housing statistics Guide to Sources and Uses provides
information on the data sources, revisions, and comparisons with other data sources
for
all
housing
statistics.
It
can
be
found
at:
http://www.scotland.gov.uk/Topics/Statistics/Browse/HousingRegeneration/HSfS/DataUses
Communities Analytical Services
March 2013