Unlocking land for housing in rural Scotland presents significant challenges, as development costs often outweigh potential returns, and securing land can be difficult. In our research for the Scottish Land Commission, we explored possible solutions, drawing on insights from organisations like Homes England, the Irish Land Development Agency, and the Highland Landbank Fund. In this blog, we summarise the key findings and recommendations from this work.

One of our main proposals is that the Scottish Land Commission should explore with the Scottish Government options for the establishment of a dedicated Housing Land Agency to acquire sites, provide necessary infrastructure, and prepare land for development. This would ensure that housing projects led by local authorities, housing associations, or private developers could progress more smoothly. Developers purchasing land from the agency would pay a fair price that reflects the investment in preparation, with any surplus funds reinvested in less viable projects. This is not a new idea and, as we acknowledge in the report, not everyone agrees that a new agency is necessary. Some believe that existing mechanisms, such as the Planning (Scotland) Act 2019 and the Rural and Islands Housing Action Plan, are sufficient. Others worry that a national agency might be too centralised and detached from local needs. We suggest that further exploration of the agency model to ensure accountability and to align its role with existing organisations is nevertheless worthwhile.

If such an agency were to be created, its structure would be vital to its effectiveness. We considered three possible models at different spatial scales. First, a national agency could benefit from strong bargaining power and economies of scale but may have limited local awareness. Second, a regional agency might bring balance of scale and local knowledge but there are likely to be challenges in defining sensible regional boundaries. Third, a local agency would be well-informed about local conditions but might struggle to secure funding and deliver at scale. We therefore recommend a flexible approach that combines national oversight with local responsiveness, following a model similar to that of Homes England, where collaboration between councils, housing associations, and a national agency could help to ensure that projects are delivered successfully.

As part of the research, we also considered the role of Local Place Plans (LPPs). LPPs have clear potential to be a valuable tool for community engagement in development. By bringing together residents, landowners, and businesses, LPPs can create a shared vision for an area. Our research suggests that LPPs could be strengthened by requiring them to include local housing needs assessments to ensure decisions are based on solid evidence. However, a major challenge is the lack of funding and professional support for these plans, which may lead to disparities between well-resourced and less wealthy communities. If LPPs are to be fair and effective, then the Scottish Government must explore ways to provide additional funding to support their development.

One of the biggest barriers to rural housing development is the reluctance of some (not all, but some) landowners to release land, even when there is a clear local need. Drawing on extensive engagement with stakeholders from across Scotland, we propose a combination of incentives and regulatory measures to address this issue, including tax incentives such as tax relief or reduced business rates for landowners who contribute to housing development. We also suggest strengthening the use of Compulsory Purchase Orders (CPOs) to allow local authorities to acquire land more effectively, alongside clearer guidance to support the process; and, related to this, the Government should consider introducing Compulsory Sales Orders (CSOs) to enable councils to force the sale of long-term vacant or derelict land at public auction, ensuring unused land is put to productive use.

The availability of land for development is not the only barrier, of course. The high costs of rural housing development – exacerbated in recent years by the impact of Brexit, the pandemic, and latterly the fallout from the Truss government’s mini budget – means that additional financial support is essential. In the current context of constrained public finances, it is crucial that we begin to think differently (and more creatively!) about how to finance new rural housing development. For example, can we redirect revenue from second homes and long-term empty properties into local Strategic Housing Funds? Could income from fish farming leases be used to support affordable housing in coastal and rural areas? Could the Scottish National Investment Bank (SNIB) do more to provide smaller-scale investment tailored to rural housing projects? And, can we ensure that whatever financial support is available is directed toward small and medium-sized enterprises (SMEs) and community-led housing enablers, who play a crucial role in meeting housing demand in rural Scotland?

If we continue with business as usual, then the supply of housing in rural Scotland will continue to fall short of demand. By taking some of our recommendations forward, the Scottish Government can help alleviate the rural housing shortage and build a more equitable and effective system for housing development.

This blog was originally posted blog on the Scottish Land Commission website.

First published: 24 February 2025

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