A housing industry veteran has said plans for more than 7,000 homes new homes in Scotland have been "stalled, switched or sold" following the introduction of rent controls.

The senior figure said that several of the schemes earmarked for build to rent housing were abandoned "due to the uncertainty of rent control".

The proposals already had planning permission for new homes, but were shelved following the introduction of rent caps by the Scottish Government aimed at easing the burden during the cost-of-living crisis but which it now looks like Holyrood wants to press through as permanent.

SNP legislation has sparked anger across the housebuilding industry while there is "hope" among some that the Housing (Scotland) Bill, introduced to Parliament in March, will be revised around its plans for rent controls and councils. While the need for more housing for students is also recognised, a balance that will help Scotland tackle its countrywide housing emergency is sought.

Will Scarlett, who is the founder and director of Edinbugh-based Scarlett Land and Development, said he "remains hopeful” there will be a rewrite around rent controls, but also pointed to "the extensive list of unintended consequences is extensive".

'Acknowledging an emergency and dealing with it are two different matters' - NRLA'Acknowledging an emergency and dealing with it are two different matters' - NRLA (Image: Getty Images)

He also said: "Controls have done the opposite of what they were intended to do.

"'Day one' rents in Scotland have risen faster than anywhere else in the UK as landlords have increased them disproportionately in order to compensate for subsequent caps and deal with rising operational costs.

"Investment into existing stock has fallen as investors – perhaps more in the Private Rental Sector – have been less able to afford to maintain stock due to rising costs and stagnant rents.

"Meanwhile the supply of new, sustainable homes, free from fossil fuels, with low running costs and managed by conscientious institutional landlords, has been radically reduced, even killed."

He added: "Rather than starting on site and being built out, consented BTR schemes in Scotland, which total over 7,000 homes, currently fall into one of three categories: stalled, switched, or sold. Several consented BTR schemes have now switched to other uses, such as student housing, due to the uncertainty of rent control."

This column highlighted how Mr Scarlett said that SNP rent control policies "have made Scotland a 'no-go zone' for both UK and international investors".

He also said in Green Street News: "In Scotland rent control has been a disaster; things can only get better. In the rest of the UK, Labour must ensure that things do not get worse through unintended and damaging consequences of a well-intended policy."

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Eleanor Bateman, senior campaigns and public affairs officer at the National Residential Landlords Association, wrote in an analysis this week: "Despite the cap, rents rose broadly in line with England, where no such cap existed. Moreover, Scottish property firm Rettie estimates that £3.2 billion of private rented sector investment has been halted since rent control measures were put in place.  

"Earlier this year, the Scottish Government published the Housing (Scotland) Bill for consultation.

"The Bill aims to further improve tenants’ rights, enhance eviction protections, mandates domestic abuse policies for social landlords and introduces new obligations for homelessness prevention.

"It also proposes a system of local rent controls to apply to both in-tenancy and between-tenancy restrictions, unlike the emergency rent cap brought in under the Cost of Living (Tenant Protection) Act 2022, which expired in March 2024 and applied to in-tenancy increases only.  

"An assessment of the Housing (Scotland) Bill published this week appears to all but confirm the introduction of rent controls."

The proposed system requires local authorities to assess rents in their area every five years and recommend designation of rent control areas to Scottish ministers if it believes controls are needed "to protect the social and economic interest of tenants in the area". 

She also said: "Once in place, rent control areas will limit rent increases to a level in line with inflation annually or market rates between tenancies. However, as the mass of evidence suggests, this is likely to reduce both the availability and quality of homes to rent, making remaining properties relatively more expensive.  

"The Scottish Government’s current approach risks plunging it further into disaster by deterring landlords from entering and staying in the sector. It serves as a cautionary tale: improving renters’ rights requires a delicate balance, and if the risk of investing becomes too great, a chronic scarcity of homes could escalate into a crisis that takes decades to resolve."

John Boyle, of Rettie said that “this [NRLA] analysis is spot on on the dangers of reform when you don't take account of consequences”, adding: “The Scottish Government's recent assessment of its Housing Bill proposals (including rent control) seems to demonstrate that the industry has had no effect on policy despite intensive efforts to engage with Govt as well as producing detailed evidence to show the dangers of current policy approaches.

“The Government using Sweden and Ireland as some kind of exemplars for RCs is particularly worrying - these countries have strict RC regimes that have had devastating impacts on supply. The waiting list for a PRS flat in Stockholm is larger than the population of Stockholm. You would think in a housing emergency that we would have a keen focus on doing stuff to increase and not decrease supply. Seems not though.”

Paul McLennan, Housing Minister, said the Scottish Government wants "to create a rented sector that both encourages investment and provides a great service to tenants", adding: "A fairer, well-managed private rented sector is in the interest of both tenants and responsible landlords.

"Our Housing Bill includes a package of important reforms to the rented sector, and we will continue to work with tenants, landlords and investors to ensure the measures in the Bill will support our vision for improving the supply and affordability of high-quality rented housing in Scotland."