## Background to Scotland’s Rent Control Exemption Proposal

The Scottish Government has laid secondary legislation under the Housing (Scotland) Act to exempt build-to-rent (BTR) and mid-market rent homes from the private rented sector rent caps. This follows nearly two years of amendments to the original Bill, which was passed in November. The changes have cross-party support at Holyrood, reflecting a balance between protecting tenants and attracting investment into new housing.

The rent controls were introduced to regulate the private rented sector, but concerns arose that they were discouraging investment in new rental housing. The exemption aims to unlock stalled development projects and accelerate the delivery of professionally managed rental homes.

## Impact on Build-to-Rent and Mid-Market Rent Investment

David Melhuish, director of the Scottish Property Federation, welcomed the move, stating: “This is a critical signal to the real estate sector and wider investor community that Scotland is once again open for build-to-rent and mid-market rent investment.” He highlighted the growing demand for “large-scale, high-quality, professionally managed, energy-efficient new rental homes.”

Melhuish added that after years of uncertainty, the new regulations provide “a genuine platform for major investment in this residential sector.” He emphasised that with the right support, BTR and mid-market rent schemes have the potential to deliver new homes at scale and pace across Scotland.

## Restoring Confidence in the Rental Sector

If approved by Parliament, the exemption will take effect from 1 April. Ministers believe this change could restore confidence among developers and investors, which was dented by the rent freeze introduced in September 2022. That freeze halted momentum in the sector, putting approximately 17,000 proposed homes and an estimated £3 billion of investment on hold.

Industry experts view the exemption as a necessary step to restart the pipeline of new rental homes and support professionally managed schemes. This includes the potential expansion of single-family rental housing, a model that has grown rapidly in other parts of the UK.

## Benefits for Housing Standards and Tenant Stability

The government argues that exempting BTR and mid-market rent homes from rent caps will help increase housing supply while improving standards. Mid-market rent properties are typically let below open-market rents and target working households who earn too much to qualify for social housing but cannot afford full private rents.

The exemption is also expected to provide longer-term stability for tenants by encouraging investment in professionally managed rental homes. Supporters say this step is essential to rebuild trust with long-term investors and help Scotland compete with other UK regions for housing capital.

## What This Means for Landlords and Letting Agents

For landlords and letting agents, the exemption signals a more favourable environment for investment in new rental properties, particularly in the BTR and mid-market rent sectors. It may lead to an increase in professionally managed rental homes, offering tenants better standards and longer-term tenancy stability.

The move could also encourage more large-scale developments, potentially increasing the supply of energy-efficient rental homes. This may provide new opportunities for landlords and agents specialising in these sectors.

Parliamentary scrutiny will determine whether the exemption framework receives final approval, but the proposal marks a significant policy shift aimed at balancing tenant protections with the need to attract fresh capital into Scotland’s rental market.