Marcus Di Rollo: Six themes that will define Scotland’s property market in 2026

The 2020s have been a turbulent time for Scotland’s housing market. Rents and prices surged during the pandemic as shifting lifestyles drove demand beyond supply and emergency rent caps introduced in 2022 added uncertainty to the market, leading to sharper increases in new lets once the restrictions eased.

Now, as we move into 2026, the sector is entering a period of recalibration.

The year ahead is likely to be defined by stability rather than volatility, shaped by regional divergence, investor caution and the growing influence of sustainability requirements.

Here are the themes we believe will shape property next year.

Market stabilisation

The rapid post‑pandemic growth phase has now given way to a more measured environment. After the end of rent caps, new‑let rents rose quickly, but the pace has since cooled, with annual growth falling from 13.7% in late 2023 to around 4.4% in early 2025.

With inflation easing, real‑term growth has narrowed, signalling a shift toward a more predictable and steady market. This calmer backdrop is expected to continue into 2026, offering greater clarity for both landlords and tenants.

Regional trends

Scotland’s rental landscape is increasingly being defined by local variation. Edinburgh and Glasgow remain resilient, supported by strong demand and limited supply while Dundee continues to outperform expectations thanks to its student population and major investment, including the plans to build new homes on a former private hospital site.

Towns such as Dumfries and Dunfermline are experiencing firm demand as affordability pressures keep renters in the market for longer while rural areas and parts of the Borders are softening as household budgets tighten and population movement slows. These differences will become even more pronounced in 2026, making local insight more valuable than ever.

Investor landscape and taxation

Taxation and borrowing costs continue to reshape investor behaviour and this trend is likely to continue into 2026. The Additional Dwelling Supplement, now at 8%, has made individual property purchases more expensive and while acquiring six or more properties can reduce the tax burden, this is not a realistic option for most smaller landlords.

Combined with higher interest rates and ongoing tax complexity, speculative investment has cooled, prompting many who once viewed buy‑to‑let as a pension strategy to reconsider.

Policy and legislative outlook

The Housing (Scotland) Bill proposes changes designed to make renting more flexible for tenants, including clearer rules around pets and redecorating. Any future rent‑control measures will need to be targeted and time‑limited if they are to avoid harming supply while interest rates will continue to influence affordability and investor confidence. Above all, a predictable policy environment will be crucial for maintaining stability throughout 2026.

Supply resilience

The private rented sector has contracted by around 10,000 properties over the past two years, which is less severe than expected. Many landlords have chosen to hold rather than exit, helping maintain a stable base of quality homes. This resilience is vital for cities that depend on flexible housing for students and key workers. Preserving this supply will be essential to avoid renewed upward pressure on rents in 2026.

Sustainability and EPC standards

Energy performance requirements are set to tighten toward the end of the decade, and 2026 will be a pivotal year for planning and preparation. Upgrading older properties remains costly, with some requiring up to £30,000 of work and uncertainty around timelines and funding risks slowing the market as landlords hesitate to commit.

Clearer government guidance, interest‑free loans and phased improvement pathways would help ensure the transition does not reduce supply. For investors, EPC compliance will increasingly shape purchasing decisions over the next few years.

Predictions for 2026

Overall, rental growth in 2026 is likely to remain modest, at around 2–3% for new lets. Edinburgh, Glasgow and Dundee are expected to continue leading the market, while well‑connected smaller towns with strong amenities will offer selective opportunities. For tenants, 2026 should bring a more stable market, clearer rules and improved choice as upgraded homes begin to enter the system.