New Scottish Housing Secretary Mairi McAllan blamed Westminster after grim figures showed the number of homes being constructed fell sharply.
Opposition politicians and property specialists condemned the Scottish government for an 11% slump in all-sector housebuilding starts and a 4% decline in completions over the past year. New starts were at their lowest since 2013.
A mix of Scottish government-imposed regulatory burdens and changing consumer demand has been blamed for the slump, with rent controls stifling investment and fewer of the younger generation unable or unwilling to buy homes.
Ms McAllan, who returned to the Cabinet earlier this month to take charge of the elevated housing brief, admitted the statistics “demonstrate the challenge we face”, but she said this was partly a result of Westminster short-changing Holyrood.
“These challenges, which are not unique to Scotland, are made harder to tackle due to an incredibly difficult financial settlement from the UK Government,” she said.
“However, we have consistently invested and have delivered more than 139,000 affordable homes from 2007 to March 2025.”
She added that 99,000 of these have been made available for social rent – 47% more per head of population than England and 73% more than Wales as of March 2024.
“I will re-double efforts now by investing £768 million this financial year in affordable housing.
“We’ll also invest a further £2 million this year to help councils unlock barriers and to target empty homes.”
Scottish Labour housing spokesman Mark Griffin accused ministers of “fanning the flames” of Scotland’s housing emergency. Tory housing spokeswoman Meghan Gallacher said: “Their policies, including reckless plans for permanent rent controls, are creating a hostile environment for investors which has led to this disastrous collapse in housebuilding.”
Homes for Scotland CEO Jane Wood stated: “The regulatory environment in Scotland is stifling the delivery of new homes rather than supporting it,” while David Melhuish, CEO of the Scottish Property Federation said: “It is clear that government policy must be focused on supporting new supply across all housing tenures.
“In addition, to restore investor confidence in Scotland, it is vital that we have incentives to bring forward the supply of new purpose-built rental homes which in the past year have seen no increase in new planning applications and a fall in construction activity of 26%.”
Alan Aitchison, partner and head of real estate and construction in Scotland at RSM UK, said that apart from government policy, there had bee shifts in the market.
He said the construction sector is still cautious about committing working capital, driven by a lack of demand from consumers in a market that has seen volatility in mortgage rates and the removal of affordable products, alongside the closure of the Help to Buy (Scotland) scheme.
Tenant demand for rental properties continues to outpace supply, which is driving up prices in the rental market and impacting sales of new homes,” he said.
“In addition, there’s concern that there’s a longer-term shift in culture within younger generations who don’t aspire to home ownership; rather their focus is on having flexibility in their accommodation and shorter-term commitments, aligned to their desired career paths and to how they gain access to other amenities such as cars, media and technology.”
He added: “As such, we’re seeing housebuilders strategically timing completions and commencement of phases within their existing sites, to try to match demand.
“This trend continues despite the government’s pledge to increase housing supply through initiatives including the Affordable Housing Supply Programme.
“Although reintroducing a scheme similar to Help to Buy could help to stimulate consumer demand, in the long term, it’s likely that Scottish Government will need to shift its focus and incentivise housebuilders and attract investment to develop housing for build to rent, to meet changing consumer behaviour.”
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