One of the Scottish capital’s biggest city centre developments for decades has had to be redrawn as a direct result of the Scottish Government’s planned housing law.

Tensions over the proposed new Scottish housing law were heightened as another major developer cited the legislation as it axed hundreds of new homes.

While the Scottish Government said aspects of the legislation such as rent controls will help the country out of its housing emergency, and this is supported by tenants’ representatives, investors are stepping away from projects because of the uncertainty surrounding the proposed Housing (Scotland) Bill.

In the latest case, the developer of "one of the largest city centre developments for a generation" has blamed the Holyrood housing proposals for it abandoning plans for over 200 new homes.

The Herald revealed the large-scale real estate company has lodged plans that would instead lead to around 550 student flats at the £250 million development.

The developer said it is "having to make changes as a result of the significant economic shift brought about by the new Scottish Housing Bill".

Now, a consultation event is being held in Broughton Saint Mary's Parish Church in Bellevue Crescent on Wednesday, October 9 between 2-7pm.

The consultation event is next week The consultation event is next week (Image: Ediston Real Estate) It is the latest in a string of new housing developments that have been axed in favour of student flats since the introduction of emergency rent cap legislation in 2022, partly to help tenants during the cost-of-living crisis, and subsequent plans for permanent rent controls, set out in the new law.

Ediston Real Estate is leading work on the New Town Quarter development in Edinburgh on behalf of Orion Capital Managers.

The project is also bringing a new hotel and office space on the landmark site of a former Royal Bank of Scotland office complex in the city’s New Town.

However, a new planning application seeks to change the nature of the accommodation, while maintaining the overall design.

It will retain 117 homes private for sale, and 108 mid-market rental housing, and the student accommodation will take the place of 210 built-to-rent homes. 

Proponents of rent caps including Living Rent, the tenants’ union, and leading architect Malcolm Fraser have said such controls can be an important part of tackling Scotland’s housing emergency.

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The housebuilding industry said more than £3.5 billion worth of housing investment has gone south because of uncertainty around rent caps and other aspects of the new law.

In the article, Ross McNulty, development director at Ediston Real Estate, said: "We've been informing the local community that, in common with many other developers in Edinburgh, we are having to make changes to our proposals as a result of the significant economic shift brought about by the new Scottish Housing Bill.

"Although the appearance and quality of the design will not change, we are bringing forward proposals to introduce Student Housing.

"This will enable us to ensure that the overall development and indeed the public realm improvements can be delivered in line with the original vision. There will be a full consultation with local residents and stakeholders before any new planning application is submitted to the City of Edinburgh Council."

This news came as industry figures again called for a rethink on aspects of the Housing (Scotland) Bill currently under consultation.

Jane Wood, chief executive of Homes for Scotland, which represents around 200 firms that "together provide the vast majority of all new homes built across the country", said: "The time for shifting the deck chairs and tinkering round the edges of the housing emergency is over."

In a separate exclusive this month, the "increasing legislative burden" by the Scottish Government was quoted in new research which reveals plunging numbers of rural homes for rent.

The study found that "there is an urgent need to encourage disenchanted landlords to remain in the sector" as those planning to sell blamed the weight of new laws including the proposed Housing (Scotland) Bill.

The research by Dr Andrew Watson, of the University of Glasgow-led UK Collaborative Centre for Housing Evidence, was funded by Argyll and Bute Council and Citizens Advice Scotland to "better understand the composition of rural landlords in Argyll and Bute, to identify the extent to which they differ in key measures from non-rural landlords, to explore the specific investment challenges they face, and to quantify their future investment intentions".

The extent of the problem in the housing emergency authority that is also Scotland’s second largest council area behind Highland is shown with 3,284 registered Scottish Private Rental Sector landlords in December 2023, against 4,520 in 2020.

The research found a third are considering selling and the majority of those pointed to the legislative burden.

On the tenants’ side, demand outstrips supply so that "every time a property becomes available there’s almost a feeding frenzy, with dozens and dozens of people looking to move".

The sector has been "subject to an increasing legislative burden via planned steady state policy interventions", the research found.

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