Page last updated at 11:36 GMT, Tuesday, 9 February 2010

Housing crisis in Scotland 'worst since WWII'

By Hayley Millar
BBC Scotland Business Correspondent

Building site
Homes for Scotland said the house building target was a long way off

The house building industry says Scotland is facing its worst housing crisis since World War II.

Industry body Homes for Scotland said it could take up to 10 years for new developments to return to pre-recession levels.

Chief executive Jonathan Fair said a lack of finance and access to mortgages were holding back a recovery.

Housing Minister Alex Neil said the government was investing £1.7bn in the industry over a three-year period.

However, Mr Fair said the target of 35,000 homes by 2015 was a "long way away".

The number of new homes being built fell from 25,000 a year before the recession, to 15,000 last year.

Mr Fair said: "It's important that target remains, but we have to be realistic about how achievable it is.

We need to see mortgage availability improve significantly, particularly for first time buyers
Jonathan Fair
Homes for Scotland

"I think it will be many years before we get to those kind of numbers on a regular basis in Scotland."

In the past few months, some developments have started and others previously mothballed, have been restarted.

The industry sees this as cautious signs of an improvement this year.

Launching the Homes for Scotland manifesto ahead of the general election, Mr Fair said more action was needed.

"We need to see mortgage availability improve significantly, particularly for first time buyers," he said.

"We need to look at fundamental reform of stamp duty and we need to think about encouraging tax incentives for investment in private rented housing."

'Innovative models'

Private housing is often developed in conjunction with social housing, helping to make it more affordable.

The drop in new build homes has been a major concern for homeless charity Shelter Scotland.

Director Graeme Brown said: "We have 140,000 people on council house waiting lists and we have 40,000 people assessed as homeless. Any downturn in the number of private houses developed, has a serious impact on social housing."

However, Mr Neil said: "This government is committed to increasing the supply of affordable housing.

"That's why we're investing £1.7 billion over three years to deliver thousands of new affordable homes and support jobs in the house building industry.

"We are in discussions with the industry about innovative investment models which will ensure housing funding has an even greater impact."

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