New draft Housing Bill for Scotland – The headlines for the rental sector

The draft Housing (Scotland) Bill has been published and laid before the Scottish Parliament. When passed, it will bring about significant changes for private and social landlords and those in the build to rent sector.

It typically takes around two years for a new Bill to pass into law, although timings will very much depend upon legislative priorities. The next Holyrood elections are due in May 2026 and we think it more likely than not that the Bill will be seen through in the current parliamentary cycle.

These are the key headlines:

1. Rent controls

This has gained the most attention. It is important to understand that the Bill does not propose that rent controls are imposed across the whole of Scotland. Instead, Local Authorities will be required to assess rents in their areas at least once every five years and then recommend whether rent controls are needed. The purpose of the legislation is to alleviate pressures on existing social housing stock by ensuring that rents within pressured areas remain affordable, but we will need to wait to see how it works in practice.

At the moment, the legislation contemplates that caps would apply “between tenancies”, not just during tenancies – so, if applied, a cap would last for five years, until the Local Authority re-assessed the need for rent controls in the area once again. There have been a lot of calls from property industry bodies on the Scottish Government to re-think this aspect of the legislation. So far, we have seen little inclination to relent, but groups such as the SPF and the Scottish Association of Landlords continue to press for this change to be made.

There will be some exemptions which allow rents to rise above the level of any cap, although details are awaited. It is likely that this will cover situations where landlords have improved the quality of the property since the cap was imposed.

Bear in mind that even if a property falls outwith a rent control zone, landlords are unable to increase rents during the first 12 months of a new Scottish Private Residential Tenancy (“PRT”).

2. Types of affected tenancies

The legislation only applies to PRTs. It will not apply to student tenancies or to company lets. The legislation will, however, seek to convert any old Short Assured Tenancies and other older forms of residential tenancy into PRTs, so older legacy residential lease styles will be caught.

3. Ending joint tenancies

Procedures will be introduced to allow a single person within a joint tenancy to bring it to an end after a two month consultation period with the other joint tenants. Those tenants who wish to remain will need to negotiate a new deal with their landlord.

4. Personalising space

The legislation proposes to give tenants more flexibility to carry out very minor changes (such as hanging pictures) without the need to get the landlord’s consent. Other minor works (such as redecoration) are to be permitted with the prior consent of the landlord, who must not unreasonably object, although a landlord can require a larger deposit to be taken to guard against a failure to reinstate when the lease ends.

The legislation also proposed to allow tenants the ability to keep pets, again subject to the landlord’s reasonable approval. Landlords can still object if the property (or the pet) is not suitable, and again, larger deposits can be demanded to protect against increased reinstatement costs.

5. Evictions

After a long moratorium, evections have again been possible since 1 April 2024. The new Bill proposes to strengthen the 1st Tier Tribunal’s hand in delaying evictions on hardship grounds. Exemptions are proposed for anti-social or criminal behaviour or where the tenant has abandoned the property.

Next steps

Much will depend on how (and where) Local Authorities choose to implement rent control areas, and whether the industry can persuade the Scottish Government to soften some of the provisions as the Bill passes through the Scottish Parliament, particularly around rent controls “between leases”. So far, the Scottish Government has not sought to address industry concerns about how the Bill will impact on the development of new, high quality residential stock at a time when the BTR sector remains in its early stages in Scotland. Although the Bill provides some more clarity around the Scottish Government’s direction of travel, much still remains uncertain and the industry continues to wait and lobby for a balanced outcome to the difficult question of housing affordability.

For now, we are speaking to build-to-rent clients about practical steps that they can take to mitigate some of the effects of the proposed Bill. There is no silver bullet, but sector specialists are already looking at how business models might be adjusted to better accommodate the coming changes.