Rent control clarity offers Scotland a second chance at build-to-rent growth
“After several years of uncertainty, Scotland’s residential investment and development market is entering a more stable and potentially transformative new phase with huge opportunities for developers and investors”
David Fraser, Residential Investment & Development Head of Agency at Ryden
After several years of uncertainty, Scotland’s residential investment and development market is entering a more stable and potentially transformative new phase with huge opportunities for developers and investors, specifically for build-to-rent (BTR). The Scottish Government’s decision to exempt BTR and mid-market rent homes from rent controls under the Housing (Scotland) Act 2025 has been widely welcomed across the sector, not least because it restores a degree of clarity that had been notably absent.
The draft secondary legislation that was recently published clearly defines exempt BTR developments as schemes of six or more residential properties, in single or joint ownership, under a single planning consent and completed on or after the 31st August 2021. Clarity on the nature of the exemption for BTR provides the market certainty that developers and investors need to commit. As a result, market sentiment towards Scotland as a residential investment location has strengthened materially in recent weeks.
Like all longer-term Investment decisions, stability and confidence are paramount and the uncertainty around rent controls stopped the emerging BTR sector in Scotland in its tracks. These are typically long-term investors, including pension funds, seeking secure, inflation-linked income streams. When the cost of living emergency legislation was introduced in September 2022, BTR developments in Scotland that weren’t already under construction, effectively stopped overnight, halting growth in the sector. With the exemption now confirmed, previously consented sites are now being revisited, and stalled pipelines reassessed.
That pause was particularly stark when set against the trajectory of BTR elsewhere in the UK. Over the past decade, cities such as Manchester, Birmingham and London have seen BTR mature into an established asset class, helping to revitalise city centres, supporting wider regeneration and significantly increasing housing supply. Scotland, by contrast, fell behind in terms of delivering the development pipeline. This new legislative clarity creates a clear opening for domestic and international capital to address the shortfall. Scottish cities could replicate the success of a city like Manchester, but only if policy continues to support a broad mix of housing tenures.
Traditional private rented sector (PRS) investment has been in decline for some time, squeezed by tax changes, additional dwelling supplements and regulatory pressures. BTR however, has emerged as a distinct and more resilient model, underpinned by scale, professional management and long-term ownership.
There remains a perception that BTR is synonymous with premium city-centre developments with extensive amenities but the model is far more diverse. There are two main categories of BTR, both of which will create high value assets, delivering a key component of the residential mix which will help address the housing emergency and can operate across a range of price points. The first is multi-family, which are typically large scale professionally managed apartment blocks with shared amenities. Multi-family developments generally located in and around city centres.
The second, and increasingly important, is single-family housing, lower-density suburban homes which can form part of wider master-planned communities with supporting infrastructure. Compared with high-rise multi-family schemes, single-family housing is cheaper to build and more flexible in terms of delivery.
The bulk of single-family BTR sector investment has taken place in England with only three schemes, approx. 450 units, completed in Scotland. We predict that there will be significant growth in the delivery of single-family BTR in Scotland in the year ahead.
An emerging sub-sector of the BTR market is Co-living, typically studio style accommodation located in city centres with high levels of shared amenities. The bulk of existing Co-living schemes are in London, but a strong development pipeline is building in most major English cities. The first dedicated Co-living development in Scotland secured planning consent in December 2025 at 100 Morrison Street, Glasgow - the first under the Glasgow City Council ‘Large Scale Co-Living Planning Guidance’. Further planning applications for Co-living in Glasgow have been submitted demonstrating appetite. There’s currently no specific planning policy for Co-living in Edinburgh, but it’s only a matter of time until schemes come forward in the city.
Scotland faces a significant housing shortage and the Scottish Governments recent focus on delivery of affordable housing in isolation doesn’t solve the problem. Private development plays a vital role too, not least because it helps fund affordable housing through planning obligations. We need homes of all types consented and developed in the next few years to alleviate the shortage.
With demand for rental homes remaining strong in Scotland’s major cities, the recent rent control exemption offers a fantastic opportunity for both developers and investors to progress Scotland’s BTR pipeline and support wider regeneration.
David Fraser, Residential Investment & Development Head of Agency at Ryden