Steven Dick

By removing this asset class from the scope of rent control, the Scottish government has addressed one of the most persistent sources of legal and commercial uncertainty facing the sector and, in doing so, has materially altered the risk calculus that has governed investment decisions over recent years.

For lawyers working with developers, funders and institutional investors, the importance of the regulations lies not only in their immediate legal effect, but in the broader signal they send about the government’s willingness to engage with how large‑scale purpose-built rental housing is financed, delivered and managed in practice.

Over the past five years, rent control has loomed large over Scotland’s housing debate, and while its objectives were well‑intentioned, the impact on BTR was both disproportionate and unsettling. The absence of a stable framework for rental growth meant that long‑term income assumptions became increasingly difficult to justify, valuations softened accordingly, and schemes that were otherwise deliverable struggled to progress beyond the drawing board. From a legal perspective, the difficulty was not simply the presence of regulation, but its unpredictability, with shifting proposals making it challenging, if not impossible, environment for clients.

Against that backdrop, the regulations provide something the sector has been lacking for some time: a clearly defined statutory distinction between purpose‑built, professionally managed rental housing and the wider private rented sector. That distinction matters because BTR operates on a fundamentally different footing, relying on institutional capital, long‑term ownership models and predictable income streams to justify significant upfront investment. By recognising this within the legislation, the government has restored a degree of coherence between housing policy and commercial reality.

In practical terms, this change enables a revisitation of development and funding structures with greater confidence, reducing the need to price in a regulatory risk premium that had become increasingly difficult to justify. Forward funding arrangements, income‑based valuations and long‑term asset management strategies can now be assessed on a more stable legal foundation, which is particularly important at a time when construction costs remain high and financing conditions are still relatively tight.

The significance of the exemption becomes even clearer when viewed in a wider UK context. In England and Wales, residential landlords and developers are navigating a sustained period of reform, with the Renters’ Rights Act 2025 set to introduce wide‑ranging changes to tenancy structures, possession rights and landlord obligations from May 2026. Alongside this, the Building Safety Act 2022 continues to impose lasting complexity and cost on higher‑risk residential development and asset management. While each regime reflects its own policy priorities, the cumulative effect has been to heighten regulatory risk for residential investment south of the border.

Scotland, by contrast, now presents a more settled picture. The long‑standing concern around rent control for BTR has been addressed, and there is no equivalent layer of building safety regulation imposing comparable burdens on new residential development. For globally mobile capital, which assesses jurisdictions comparatively rather than in isolation, this relative stability is increasingly attractive, and early market indicators suggest that sentiment is beginning to respond accordingly.

Glasgow’s strong showing in recent residential investment rankings offers tangible evidence of that renewed interest, underpinned by robust demand, constrained supply and an improving policy environment. For legal advisers, this is likely to translate into revived transactional activity, renewed momentum on stalled schemes and a greater willingness among investors to re‑engage with Scotland as a core BTR market.

The rent control exemption does not, however, sit in isolation. The recent establishment of More Homes Scotland, the new national housing agency, reinforces the sense that ministers are placing renewed emphasis on delivery rather than abstraction. Fragmentation across land, funding, planning and housing policy has long been cited as a barrier to large‑scale residential development, and a more coordinated approach has the potential to reduce delay risk and improve speed to market for complex rental schemes. While it is too early to judge the agency’s effectiveness, the direction of travel is, at the very least, encouraging.

That said, cautious optimism remains the appropriate stance. One unresolved issue is the proposed Scottish building safety levy, due to apply to new residential development from April 2028, including BTR. With levy rates yet to be confirmed and limited exemptions currently proposed, there is a risk that additional cost pressures could undermine any progress made through the rent control exemption if the regime is not carefully calibrated.

Ultimately, the 2026 regulations mark an important reset for Scotland’s BTR sector. By restoring legal clarity and acknowledging the role of institutional capital in delivering new homes, they strengthen Scotland’s competitive position at a time when residential investment is increasingly selective. If that clarity is maintained, and supported by a sustained focus on delivery, this may come to be seen as the point at which confidence in Scotland’s Build to Rent market genuinely began to return.

Steven Dick is a partner at Eversheds Sutherland