Scotland’s build-to-rent reset: regulatory clarity restoring investor confidence

Recent legislative change in Scotland has reshaped the outlook for the build-to-rent (BTR) sector.

With rent control exemptions now in force and a distinct regulatory framework emerging north of the border, early signs suggest growing interest in the asset class.

This article is the first in a series by the living sector team at Burness Paull and will examine what has changed, how the market is responding, and what it means in practice for UK investors, developers and operators.

A recent history of stalled developments

A 2026 report by property consultants LSH indicates that there are just over 5,000 completed BTR units across Scotland; around 10,000 units with planning approval; just over 2,000 units undergoing planning consideration; and 57 units under construction. Just 57 BTR units being built across the whole of Scotland, at a time when there is a government-declared housing emergency.

The question is: why is there a substantial consented pipeline, but nothing meaningful under construction? The answer for the Scottish BTR sector is straightforward – recent legislative uncertainty and cost of delivery.

The good news is that uncertainty around rent controls for the BTR sector has now lifted. The Housing (Scotland) Act 2025 and The Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026 are both now in force – essentially any true BTR project which is developed in Scotland from here onwards should qualify for exemption under the Scottish rent control requirements. The project must be developed under a single planning consent on or after 31 August 2021, be held within single ownership, be purpose built/converted/renovated for private residential use and comprise six or more residential properties (there are some further nuances that we won’t go into in this article). The positive outcome for the BTR sector is a testament to the hard work done on behalf of the property industry by the Scottish Property Federation (SPF) and others.

A divided market

Legislation has now created a clear divide between purpose-built BTR and the rest of the private residential letting market in Scotland. Even within the BTR sector itself, however, we are seeing different attitudes towards development and investment opportunities.

We will explore some of the challenges facing the BTR sector in Scotland in more depth in a later article in this series, but for now it’s worth touching on the differing appetite for co-living and single-family developments in the wake of the legislative and political clarity achieved in the last few months. Sentiment has improved, but the numbers still need to stack up.

It is the financial modelling which is still challenging for new, high-spec co-living developments. Whether it’s build-cost inflation, increased building safety costs, or affordability concerns by end users, it remains challenging to get large-scale co-living developments to stack up. None of this is to say that interest in new Scottish co-living developments has faded altogether – it hasn’t, as evidenced by recent planning consents and applications in Glasgow by Copperstone (420 units), Downing (302 units) and MRP (167 units), but the sector still needs to see these sort of projects funded and coming out of the ground before confidence fully returns.

This leaves us with single-family BTR – candidly, a much easier proposition given the clarity around rent controls. National housebuilders are still building, but their core build-for-sale market is undergoing a lull. That leaves space for large-scale BTR investors to step in and take completed units from the developers. Just last month, the Scottish National Investment Bank (SNIB) announced a £50m investment into Legal & General’s BTR fund. L&G has long been at the forefront of institutional capital’s interest in the residential sector, and residential investment is at the core of SNIB’s strategy.

It is worth remembering that of SNIB’s original £2bn commitment from the Scottish Government (funded through until 2030), around £1.21bn is still uncommitted. Given the social need for more high-quality housing, the BTR sector ticks many of the boxes required by SNIB’s mandate, while the national housebuilders have a steady pipeline of product to serve the single-family market. That development product is currently lacking in the co-living space. If funding, product and demand are aligned, then we can expect to see real progress for the single-family BTR in Scotland.

SNIB is not the only source of funding in the sector just now. However, it is one of the most talked about, and with good reason too. Taken from its 2025/26 Investment Strategy Report, SNIB’s core investment goals are:

We know of major single-family BTR projects in the pipeline that are focused on providing affordable key worker accommodation within developments that are powered by district heat network. These thoughtful and well-planned developments can hit a number of SNIB’s investment goals at the same time, in a way that most other property asset classes would struggle to match.

Does Scotland have a legislative edge?

Maybe. By luck or design, Scotland has created a legislative framework that appears to be more supportive of BTR than other parts of the UK:

• Rent controls: The position for BTR is now clear in Scotland, but rumours persist of pressure groups advocating for rent caps to be introduced in England. There are reports that the Institute of Public Policy Research has been trying to persuade the Chancellor to adopt some kind of inflation-linked cap, while London Mayor Sadiq Khan has long been vocal in his support for rent controls. Housing needs are complex and there is no single solution to fix problems across all parts of the UK, but Scotland’s painful experience in recent years of debating rent controls is a lesson worth paying attention to. Legislators in Westminster would be wise to tread very carefully.
• Building safety: The Building Safety Act 2022 introduced a complex approval regime, including the “gateway” process for higher-risk buildings. Scotland has taken a different approach, and while no developer would argue that the Scottish system is running as smoothly as they would like, it is not plagued by the chronic gateway approval bottlenecks that are being seen in England right now.
• Tenant protections: The restrictions on “no fault” evictions imposed by the recent Renters Rights Act 2026 bring England into closer alignment with Scotland on the issue, where 2016 Scottish legislation largely had the same effect. Scotland benefits in the short term by having had a number of years to digest and adapt to this, whereas investors in England are just now coming to terms with the implications of “no fault” evictions.
• Tax: For now, at least, Scottish investors continue to benefit from Multiple Dwellings Relief from Land and Buildings Transaction Tax (the relief was withdrawn in 2024 for SDLT in England), which can make it more cost effective to transact asset sales within the BTR sector.

Looking ahead

BTR is still a relatively young asset class north of the border. Pioneers such as Platform, Moda, Vita, and L&G have been early entrants, and their experience will serve them well as the dust settles and attention focusses more sharply on the BTR sector in Scotland.

Build-cost inflation has made it more difficult to justify projects in Scotland, and there will be more legislative change to be wrestled with in the future. But for now, some of the clouds seem to be clearing for BTR in Scotland.

How we can help

Burness Paull’s real estate and living sector teams advise investors, developers and operators across the UK on BTR and wider residential investment strategies. Specialist advisors can help investors and developers to navigate real estate, tax, planning and construction nuances which impact BTR projects, and our close involvement with industry bodies helps us to keep on top of an evolving regulatory landscape. Please get in touch if you would like to discuss an opportunity.

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