Russell Munro

This was partly self-inflicted, with the government cutting its affordable housing building supply programme and imposing rent controls without exemption, which turned developers in the key Build To Rent (BTR) sector away from Scotland to other UK cities.

The Housing (Scotland) Bill – passed last month by Holyrood lawmakers – is a pragmatic step towards improving the environment for new housing supply and attracting developers in the BTR and mid-market home sectors back to Scotland.

However, despite looming Holyrood elections in 2026, it is essential that the secondary legislation required by the bill is brought forward, and the other many challenges that impact and delay the development pipeline across all housing sectors are addressed.

The legislation could result in long-term caps being imposed on the rent that landlords can charge in parts of Scotland, but with important exemptions for some parts of the private rented sector.

These exemptions, which include BTR, mid-market homes and student accommodation, are a welcome signal to investors and should help restore confidence in a market that has seen significant hesitation.

Among other things, the new legislation provides local authorities in Scotland with powers to designate areas where rent increases must be capped at a rate of Consumer Price Index (CPI)+1 per cent, up to a maximum rise in rent of six per cent per year.

The CPI +1 per cent cap was supported by the Scottish Property Federation as providing some certainty which investors could price into their product and it is expected to be implemented by 2027.

The bill also provides for the removal of the cap on increasing council tax for second and empty homes. While the rent control framework offers clarity for both tenants and investors regarding how caps may be applied, the authority to propose rent control areas rests with local councils.

For these powers to be exercised effectively, councils must be equipped with robust, granular data on rental trends. Accurate collection and analysis of this data will be essential to support evidence-based decisions on whether and where rent controls should be introduced.

The latest statistics on housebuilding in Scotland show that construction was completed on fewer new homes in 2024-25 than in any other year since 2017-18, discounting 2020-21 where building works were impacted by the onset of the Covid-19 pandemic.

The bill also strengthens tenants’ rights to keep pets in properties they rent and to make alterations to those properties. Under the new law, landlords for social housing are also expected to have policies in place to support tenants at risk due to domestic abuse.

A further measure provided for in the bill is the implementation of the so-called Awaab’s Law, which sets timescales landlords need to meet to fix issues in private rented sector properties that present a health hazard to tenants, such as damp and mould.

The Scottish government said it intends for the new law to begin applying from March 2026, though this is subject to parliamentary approval.

Russell Munro is a partner at Pinsent Masons