Sections of the commercial property sector have regularly warned the Scottish Government’s approach to rent controls is putting investors off investing in build-to-rent projects in Scotland at a time when Scotland faces an acute shortage of homes.
Ministers introduced a temporary rent freeze and a moratorium on evictions in the depths of the cost of living crisis in 2022 and have brought forward new proposals for rent controls in the Housing (Scotland) Bill currently making its way through the parliamentary process at Holyrood. It comes after a number of local councils across Scotland have declared housing emergencies.
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John Boyle, director of strategy and research at Rettie, cited “political risk” today as a major reason for the BTR “deadlock” in Scotland.
“Unfortunately, investors have tagged Scotland with a risk premium due to concerns about future legislative and tax changes,” he said. “In no small part, this stems from the introduction of the rent freeze in 2022, with no prior consultation or warning, and the risk premium has remained high due to the prospect of a national system of rent controls proposed in the new Housing (Scotland) Bill, which is progressing through Parliament.
“Strong underlying market fundamentals have kept Scotland’s BTR sector alive, but there has been very slow progress over the last year and no new investment in the sector for the best part of two years. While a number of schemes have achieved completion over the last 12 months, to date 2024 has seen the fewest number of new BTR units entering the pipeline since 2015.”
Mr Boyle added: “Revisions to the Housing Bill will be required to breathe life back into the sector, otherwise build to rent will continue to happen in the rest of the UK, but not here.”
