Scotland confirms details of rent control exemptions

Russell Munro, who specialises in build-to-rent and large-scale residential development projects, and development specialist Paul Connolly, both of Pinsent Masons, were commenting after draft legislation providing for the exemptions was published.

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

The draft regulations, which require approval of the Scottish Parliament, define which BTR and MMR properties would be eligible for exemption. A summary is contained in an accompanying explanatory note.

“A build to rent 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 (‘relevant development’),” according to that note. “That announcement was made on 31 August 2021. 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.”

“A mid-market rent 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 specified level above which rent cannot be increased is the median of market rent levels for a property of that size (or, in certain circumstances, similar size) in that broad rental market area,” it said.

The exemptions, if enacted, would apply within any ‘rent control areas’. This is 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%, up to a maximum rise in rent of 6% per year.

In September 2025, the government also confirmed that rent controls would not affect purpose-built student accommodation (PBSA) in Scotland. However, the government is expected to introduce further legislation in the coming months outlining the model terms and conditions for PBSA providers. This will include the proposed introduction of a 28-day notice for students to end tenancies in certain circumstances such as the bereavement of a close family member or illness.

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 the Covid-19 pandemic. According to the latest figures, published in December 2025 for the third quarter of last year, construction started on fewer private new builds than in any three-month period since the pandemic struck in the spring of 2020.

Last month, the Scottish government announced its intention to set up More Homes Scotland, which will be a new national housing agency. The new agency’s focus, when it is operational, will be 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 government said.

It added: “A process to co-design the functions and operating model of the new agency will be led by the Cabinet Secretary for Housing in partnership with local authorities and the Scottish National Investment Bank over the coming months, with an update expected to be provided to the Scottish Parliament in March.”  

Paul Connolly of Pinsent Masons said. “We welcome the exemption of BTR and MMR from rent control measures and the introduction of More Homes Scotland. The moves send 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.”