Pictured: Russell Munro and Paul Connolly

Under proposed new regulations, from 1 April 2026 restrictions on increasing rent would not apply to the owners of certain “build to rent” (BTR) and “mid-market rent’”(MMR) properties.

Under the draft regulations, a BTR property is described as a property forming part of a development of six or more residential properties, all in single or joint ownership, all covered by the same planning permission, and where the completion date for the property is on or after the Scottish ministers’ announcement of the intention to introduce rent control.

The exemption would no longer apply if the property is owner-occupied, used for a short-term let, removed from the landlord’s entry in the landlord register, or no longer part of a relevant development.

An MMR property is described as a property where the landlord is prevented from increasing the rent in three specified circumstances, those restrictions prevent the landlord from increasing the rent above a specified level and the rent is not increased above that specified level.

The restrictions on rent increases can be in the form of conditions attaching to direct or indirect funding for the provision of the mid-market rent or via conditions in the tenancy agreement.

The exemptions, if enacted, would apply within any “rent control areas” – a concept provided for under the Housing (Scotland) Act that came into force last year.

That legislation provides local authorities in Scotland with powers to designate areas where rent increases need to be capped at a rate of CPI + 1 per cent, up to a maximum rise in rent of six per cent per year.

Last September, the government confirmed that rent controls would not affect purpose-built student accommodation (PBSA) in Scotland. However, it is expected further legislation will be introduced in the coming months outlining the model terms and conditions for PBSA providers.

There have been concerns within the property industry about the impact of strict rent control measures on housebuilding. Data shows that construction was completed on fewer new homes in Scotland in 2024-25 than in any other year since 2017-18, discounting 2020-21 where building works were impacted by the onset of Covid-19.

According to the latest figures, published in December, for the third quarter of last year, construction started on fewer private new builds than in any three-month period since the spring of 2020.

Last month, the Scottish government announced its intention to set up More Homes Scotland, a new national housing agency which will focus on “large-scale affordable housing projects; rural and island housing; acquiring, preparing and releasing land; enabling infrastructure work to unlock stalled sites; and closer working with the Scottish National Investment Bank to make best use of private finance”.

The exemption of BTR and MMR from rent control measures and the introduction of More Homes Scotland is to be welcomed and sends a strong message to investors and developers in the property industry that Scotland is a supportive environment for build-to-rent and mid-market rental investment.

Russell Munro and Paul Connolly are both partners at Pinsent Masons