MSPs back ‘rent control areas’ in new housing law

Paul Connolly and Russell Munro of Pinsent Masons were commenting after MSPs vote to pass the Housing (Scotland) Bill on Tuesday. It was approved in a final vote by 89 votes to 28, following extensive debate and consideration of around 400 amendments.

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 CPI + 1%, up to a maximum rise in rent of 6% per year. These controls are expected to be implemented by 2027. The CPI +1% cap was supported by the Scottish Property Federation as providing some certainty which investors could price into their product.

Mid-market rent, build-to-rent (BTR) properties and student accommodation are all excluded from this rent control framework.

Connolly said: “The Scottish Government declared a housing emergency in May 2024, acknowledging that Scotland lacked sufficient housing supply to meet demand. This was partly self-inflicted, with the government cutting its affordable housing building supply programme and its imposition of rent controls without exemption turning developers in the key BTR sector away from Scotland to other UK cities.”

“This Bill takes a step towards improving the environment for new housing supply and attracting developers in the BTR and mid-market home sectors back to Scotland, but it is essential, despite looming Holyrood elections in 2026, 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 be addressed,” he said.

Munro added: “The passing of the Housing (Scotland) Bill, with its targeted exemptions from rent control for BTR and mid-market rental properties, reflects a pragmatic recognition of the need to attract large-scale investment into the rental housing sector. These exemptions are a welcome signal to investors and should help restore confidence in a market that has seen significant hesitation.”

“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,” he said.

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.

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. Awaab’s Law is due to be phased in for social housing in England, starting on 27 October.

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

The Bill also provides for the removal of the cap on increasing council tax for second and empty homes.

Further provisions are targeted at homelessness prevention, with public bodies like local authorities, the police and health services required to proactively identify and support individuals at risk of homelessness.