Whilst a degree of confidence had already returned to the build-to-rent (“BTR”) and mid-market rental (“MMR”) markets in Scotland following the Housing (Scotland) Act 2025 receiving Royal Assent, The Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026 being laid before the Scottish Parliament will be a further welcome step for developers and investors involved in the sectors.
The draft regulations are short but sweet, providing a clear list of criteria that must be satisfied for properties to be considered BTR or MMR and therefore exempt from rent control measures contained within the Housing (Scotland) Act 2025.
To qualify as BTR, the regulations provide that property must:
- have been built, converted or renovated for use as a residential property;
- form part of a “relevant development”;
- have been completed on or after 31 August 2021; and
- be included in the owner’s entry in the landlord register.
A “relevant development” must:
- comprise six or more properties, which are covered by the same planning permission;
- be owned by the same person/entity or group of persons; and
- since its’ completion have only been used for lease under a private residential tenancy. Importantly, use as a short term let prevents a property from being a relevant development.
Whereas to qualify as MMR, landlords must be restricted from increasing the rent of the relevant property above the median of market rent levels for similar properties in the area as a result of:
- receipt (by the landlord or a third party) of funding from the Scottish Government or local authority subject to conditions restricting the ability to increase rent; or
- the terms of the tenancy agreement for that property restricting the ability to increase rent.
Whilst we await the regulations being considered and approved by the Scottish Parliament, the draft regulations show a clear commitment from the Scottish Government to reinvigorating the BTR and MMR sectors in Scotland. With activity in these sectors significantly reduced since the introduction of rent control measures, developers and investors can breathe a sigh of relief and start looking ahead to the opportunities that Scotland can offer.
If you would like to discuss how the proposed exemptions from rent controls might affect your business, our market leading living sector and housebuilding teams would be delighted to help – please reach out to Peter Chambers, Sophia Munro or your usual Burness Paull contact.
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