Scottish BTR market stalls due to rent controls

Scotland’s build-to-rent market is “stuck in the pipeline”, with an estimated £2.5bn of projects held up in pre-planning or planning stages and at increased risk of not being delivered. According to Rettie, the projects could deliver up to 14,000 homes in Scotland. A report by the agent also noted a recent trend for developments to move away from BTR to purpose-built student accommodation due to the buoyancy of the student accommodation market and the lower level of contributions required, as well as lower regulatory burden. Rettie estimated that around 1,400 BTR pipeline homes have moved to PBSA in the past year. The lack of institutional investment in the Scottish BTR market follows the introduction of the rent freeze in Autumn 2022. The reluctance to invest in the market 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 the Scottish parliament. John Boyle, director of strategy and research at Rettie, said: “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. “Revisions to the Housing Bill will be required to breathe life back into the sector, otherwise BTR will continue to happen in the rest of the UK, but not here.” See market analytics data for Scotland >> Credit © Andrew MacColl/Shutterstock