As the Housing (Scotland) Bill approaches its final stage in the Scottish Parliament, Scotland is at a critical juncture in shaping the future of its private rented sector (PRS). Central to this bill is the introduction of rent control measures, which have triggered polarising debate.

Too often, this debate is framed as landlords versus tenants, but such a binary view oversimplifies a complex issue. The real challenge lies in developing a rent control system that ensures affordable housing for tenants while still encouraging landlords to invest and remain active in the market.

A Pragmatic Shift in Policy

Recent statements by the Cabinet Secretary for Housing suggest that the government is taking a pragmatic and proportionate approach. There’s increasing awareness that rigid rent caps, if poorly designed, risk driving landlords out of the market—particularly those with only one or two properties who already operate on thin margins. A key concern is that, without adequate incentives, landlords may choose to sell their properties, reducing the overall rental stock and inadvertently worsening the housing crisis.

The Cabinet Secretary’s indication that Mid-Market Rent (MMR) and Build to Rent (BTR) properties may be exempt from future rent controls is a promising development. These sectors rely on long-term investment models, where predictability around returns is essential. Without such exemptions, new developments could stall, and even existing rental stock could become financially unviable.

Landlords Are Essential – Especially Small-Scale Ones

Scotland’s private landlords provide homes for more than 350,000 households, playing a vital role in meeting housing demand. However, there is growing evidence that small-scale landlords are leaving the sector, citing excessive regulation, uncertainty, and unmanageable costs. These are not large property firms but often individuals relying on rental income to support pensions or savings.

This exodus is especially troubling in rural and suburban areas, where these landlords make up the majority of rental housing supply. If they continue to withdraw, the rental market could shrink, leading to higher rents and less choice for tenants.

Rent Controls: Worthwhile Goals, but Risky If Misapplied

The primary goal of rent control is to protect tenants from rapid and unaffordable rent hikes, providing stability and reducing the risk of homelessness. While this goal is commendable, international examples—from Berlin to New York to Stockholm—demonstrate the risks of poorly implemented rent control. In these cities, policies meant to improve affordability often backfired, leading to reduced housing supply, declining investment, and ultimately, higher rents.

Scotland must avoid making the same mistakes by designing a rent control system that is flexible, realistic, and responsive to market conditions.

A Dangerous Spiral: Arrears, Evictions, and Declining Standards

If landlords are unable to raise rents—even modestly—to keep up with inflation, cover maintenance costs, or recover investments in upgrades, they may cut back on repairs, sell their properties, or even fall into mortgage arrears. In such cases, tenants face the double threat of poor housing conditions and increased evictions.

A rent control system that ignores economic realities risks creating a lose-lose scenario: tenants can’t afford rising rents and fall into arrears, while landlords struggle to cover costs and are forced to exit the market. For rent controls to succeed, they must be economically viable for all parties involved.

Encouraging Responsible Investment

In a positive move, the Cabinet Secretary’s recent announcement that the Housing Bill may include provisions to allow above-cap rent increases in certain justified cases. These include situations where landlords have historically kept rents low or have made substantial investments in property improvements.

This approach is crucial. Not all rent increases are exploitative—some are necessary to ensure safe, modern, and energy-efficient housing. Without the ability to recoup such investments, landlords will have no incentive to maintain or improve their properties. Over time, this would lead to a decline in housing quality, defeating the very purpose of tenant protections. This principle is also true in the setting of rents in the social housing sector.

By offering measured flexibility, the government is taking a sensible step toward aligning the interests of landlords and tenants.

The Importance of Proportionate Regulation

For rent controls to be sustainable, regulation must strike the right balance. Tenants need protection from sudden and unaffordable rent hikes, but landlords need confidence that they can manage their costs, plan for the future, and earn a fair return.

If regulation becomes too rigid or punitive, it risks driving landlords out of the market, which in turn can shrink supply and increase rents for the remaining tenants. The solution lies in tailored, proportionate regulation that recognises different landlord profiles, regional housing pressures, and the importance of maintaining housing quality.

Moving Past the “Landlords vs Tenants” Mindset

Perhaps the most important message is that this isn’t a zero-sum game. Scotland’s housing challenges will not be solved by vilifying landlords or painting tenants as helpless victims. Most landlords are not profiteers; they’re individuals navigating rising costs and complex regulations. Similarly, most tenants are simply seeking affordable, secure, and quality homes.

A productive way forward requires collaboration, not confrontation. Policymakers must engage with both sides, listen to concerns, and design rules that foster a healthy, sustainable rental market.

Learning from Others, Leading with a Scottish Model

Scotland now has a unique opportunity to learn from global examples and avoid the pitfalls of overly aggressive rent controls. The key is to build a distinctively Scottish model—one that balances tenant protection with landlord viability, and focuses on long-term outcomes rather than short-term political wins.

The Cabinet Secretary’s commitment to ongoing consultation with landlords, tenants, investors, and local authorities is encouraging. This kind of inclusive, evidence-based approach is essential if the new rent control system is to be trusted, effective, and sustainable.

A Chance to Get It Right

The Housing (Scotland) Bill has the potential to reshape Scotland’s private rented sector for the better. But for rent controls to succeed, they must be flexible, proportionate, and designed in partnership with stakeholders. Getting it right means protecting tenants from unaffordable housing while also keeping landlords in the market and invested in their properties.

Maybe Scotland can lead the way with rent controls that truly work—but only if the policy is fair, functional, and built on shared responsibility, not division.