Scotland’s struggling build-to-rent sector faces a pivotal moment as the Scottish Parliament prepares to debate 447 proposed amendments to the Housing Bill next Tuesday, April 29.
The debate, taking place at the Local Government, Housing and Planning Committee’s Stage 2 hearings, comes amid new data from the Scottish Property Federation (SPF) and Savills that highlights the slowdown in Scottish BTR activity.
According to the analysis, there has been a continued marked decline in Scottish BTR construction activity, with a 26% drop in the number of homes under construction in Q1 2025 when compared to the same period last year of 2,545 homes.
Additionally, only 1,896 BTR homes are currently under construction in Scotland, down from 2,545 in Q1 2024. In stark contrast, England — despite facing its own market pressures — has seen a 6% growth in the planning pipeline.
The SPF said the cause of investor unease is the Scottish government’s ongoing pursuit of rent control legislation. While the most recent government amendments to the Housing Bill propose a more tempered, inflation-linked cap — Consumer Price Index +1%, capped at 6% — the sector remains wary.
This measure, which aligns with recommendations the SPF made last year, is broadly welcomed as a step toward predictability. It offers tenants protection against sudden rent hikes while giving landlords a clearer, more stable investment environment.
However, it is the government’s insistence on extending rent control to properties between tenancies that continues to draw sharp criticism.
Additional proposals — including extending rent controls to student lets and enabling students to challenge rent increases — reflect broader political efforts to tighten regulation of the private rented sector. Yet these moves come at a time when the SPF estimates that around £3bn in potential BTR investment remains stalled due to policy uncertainty.
Scotland has recorded zero growth in the number of new BTR schemes being submitted for planning, with the total number of units standing at 10,829.
On the total number of new BTR homes delivered as existing schemes are built out there has been an increase across Scotland of 1,152 homes (43%), compared to 15,786 (15%) in England.
SPF said the challenge the Scottish BTR sector now faces is one of pipeline exhaustion. This is due to the drop-off in on-site activity and the dearth of new schemes being submitted for approval and granted planning consent.
The slowdown in construction activity, and the lack of growth of new schemes being taken through planning, are undoubtedly the consequence of the ongoing rent control proposals and reflective of the diminished confidence of investors.
David Melhuish, director of the SPF, said: “This disappointing evidence of zero growth in new BTR applications is sadly not surprising and echoes what we have been saying for years as a sector to the Scottish government. These figures are the natural consequence of a lack of investor confidence over the last three years in the future of Scotland’s BTR sector as a result of persistent policy uncertainty, especially around rent controls.
“Looking forward, we urge the Scottish Parliament to agree to amend the Housing Bill in line with the government proposals on an inflation related and capped rent control mechanism. If introduced with incentives for new build rental homes, including mid-market rental homes, this will we believe begin to restore investor confidence in the future of Scotland’s BTR sector.
“While construction activity has slowed across the whole of the UK, Scotland has seen the most significant fall. Unless the Scottish government moves to restore investor confidence through supporting new build and amending some of its more controversial policies such as between tenancy rent controls, then we will soon exhaust the new supply pipeline of BTR homes as no new planning applications are coming forward and those with approval are simply not being progressed.”
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