New initiative aims to support rural and brownfield development amid steep decline in SME housing market share
Scotland’s small and medium-sized homebuilders have long been the unsung heroes of local housing development. But with their market share sliced in half since 2017, industry body Homes for Scotland (HFS) is turning to collaboration to help reverse the trend.
On April 22, HFS announced a new partnership with roof window manufacturer VELUX to provide strategic support for SME builders, many of whom are struggling under the weight of financial, regulatory, and planning challenges.
SME Sector in Crisis: Market Share Halved in Six Years
HFS’s 2024 Scotland’s SME Home Builders: Data Review and Industry Insights report sounded the alarm last year. It showed that:
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In 2017, SMEs were responsible for roughly 40% of homes sold in Scotland.
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By 2023, that figure had dropped to just 20%.
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In rural and remote areas, more than one-third of all homes are still built by SMEs.
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In urban centres, over 90% of SME development occurs on brownfield land.
This data confirmed what many in the sector already knew: without intervention, Scotland risks losing a vital part of its housing ecosystem.
New Alliance Focuses on Practical Solutions
The new collaboration between HFS and VELUX will bring practical resources to the table — including events, workshops, and targeted research — aimed at tackling the barriers SME builders face.
A cornerstone of the initiative is a Business Development and Finance Day, designed to help smaller developers build industry connections, access capital, and gain insight into funding routes often closed to firms without extensive legal or financial infrastructure.
Another key outcome will be an updated data review and industry survey, giving HFS and its partners the latest evidence to push for regulatory reform and funding innovation from the Scottish Government.
A Timely Boost Ahead of Election Year
With 2025 marking the 25th anniversary of Homes for Scotland — and a likely pre-election period — CEO Jane Wood said the timing of the partnership could not be more critical.
“SME homebuilders are a diverse and dynamic sector, significantly contributing to the economic and social wellbeing of communities across Scotland,” said Wood.
“However, they face many challenges in the current operating environment which jeopardise their very existence.”
Wood added that the VELUX partnership strengthens HFS’s advocacy in a “strategic” way, allowing the organisation to better lobby for financial and regulatory changes to help Scotland’s SME builders survive — and thrive.
Daylight, Design, and the Push for Healthier Homes
VELUX, best known for its architectural daylighting products, said the partnership reflects a shared focus on quality, health, and sustainability in new home construction.
“We believe that homes should support high-quality health and well-being outcomes,” said Trevor Smith, national housing manager at VELUX.
“That’s why we are so excited about our partnership with HFS — it reflects our mission to promote healthier indoor environments through better daylight and ventilation.”
He added that SME builders play a key role in creating bespoke, community-focused developments that mainstream volume builders can’t always provide.
The Road Ahead: From Evidence to Action
The pressure is now on policymakers to respond to the data and insight HFS continues to surface.
Key objectives of the HFS–VELUX initiative include:
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Highlighting SME struggles through fresh evidence to stakeholders
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Creating platforms where small builders can connect with financial institutions and policymakers
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Promoting health-centric housing design as a competitive advantage
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Reinforcing the role of SMEs in rural and brownfield regeneration
Scotland’s rural housing need is especially pressing. Many remote communities depend on SMEs for custom or small-scale builds that national developers often overlook. Without meaningful support, those communities risk being frozen out of the housing market altogether.
A Housing System in Need of Balance
As Scotland faces a wider housing supply crisis, the future of its SME housebuilding sector could determine how equitably — and sustainably — that crisis is addressed.
Unlike large housebuilders, SMEs tend to be locally rooted, often working on projects tailored to specific community needs. That makes them well placed to deliver homes that reflect local heritage, support aging populations, and fit within delicate environmental contexts.
But unless the financial landscape improves, many of these firms face extinction.
