Time to Back Scotland’s SME Home Builders – Before It’s Too Late
In June 2024, Homes for Scotland (HFS) took a bold step to fill a glaring gap in our national housing data. Our landmark report, Scotland’s SME Home Builders 2024: Data Review and Industry Insights, brought together for the first time a comprehensive picture of the state of Scotland’s SME home building sector—laying bare the vital role these businesses play, the ground they build on and the pressures threatening their survival.
The findings were sobering: since 2007, the number of SME home builders in Scotland has plummeted by two-thirds. 2023 alone saw a record number of dissolutions. The warning lights are flashing—and have been for some time.
This data must be a wake-up call. It's not just numbers on a page—it’s evidence of a sector being squeezed out by complex regulation, sluggish planning systems, and outdated funding models. Twelve months ago, HFS presented this reality directly to Scottish Government Ministers at a dedicated Roundtable, making a clear case for urgent, decisive intervention. The sector has been unequivocal in its calls for reform: streamline regulation, reform planning, and unlock new funding opportunities to help SMEs do what they do best—deliver high-quality, energy-efficient homes across Scotland, especially in rural areas and on brownfield sites. With every newly built home supporting 3.5 jobs, SMEs truly are crucial to supporting job creation within local communities, providing training and skills pathways for new entrants seeking a career in homebuilding.
Yet a year on, we’re still waiting. No clear plan. No meaningful action.
This inaction stands in stark contrast to the bold reform agenda being rolled out in England, where the UK Government has pledged to "back SME builders to get Britain building". Concrete steps there include streamlined planning reforms which recognise small housing sites developed by SMEs, new land and finance options via Homes England, a Small Sites Aggregator, and a £100 million SME accelerator loan fund.
In Scotland? Silence.
And the impact of that silence is deafening. Our just-published follow-up report, Scotland’s SME Home Builders in 2025, shows 90% of SME builders believe current government policy is actively harming their business. Over half estimate that new regulations introduced since 2021 have added more than £20,000 to the cost of building a single home. This isn’t just bad for our SME home builders, who are vital to building out brownfield sites and bringing forward rural homes, it’s devastating for all the aspiring homeowners in Scotland, who will see house prices unfortunately continue to rise. At a time of national housing emergency, and over half of the Scottish population living in local authority areas which have declared a local housing emergency, this is simply unacceptable.
It is in this context that HFS continues to champion the needs of our SME sector and why we are committed to strategically collaborating with the wider supply chain supporting home building. With the valued supported of VELUX this year, we will see the delivery of a new programme of events, workshops and research, which kicked off with our flagship Business Development and Finance Day in June 2025, designed to help SMEs grow, connect and innovate.
And with a new Cabinet Secretary for Housing now in place—finally recognising the scale of Scotland’s housing emergency—we have a fresh opportunity to make change happen. HFS is calling on the Scottish Government to act now and overhaul regulation across government to ensure it's proportionate, practical, and tailored to SME needs. Reform the planning system to fast-track decisions on smaller housing sites and reduce the cost and complexity that’s holding SMEs back and introduce innovative funding streams and partnerships to unlock finance for SME developments, particularly on challenging urban and rural brownfield land.
Scotland’s SME home builders are ready to build. It’s time for government to match that ambition, back this vital sector, and help shape a housing system that truly works—for everyone.
Jane Wood is Chief Executive of Homes for Scotland
