The critical build to rent market in Scotland has been "basically closed" until there is more clarity around the SNP and Green administration’s homes law, it is claimed.
Unease around aspects of the new Housing Bill including rent controls is growing to the extent the market has virtually drawn to a standstill in Scotland, a senior industry figure said, while construction and investment continue unabated south of the Border.
Backers and housebuilders have the option of simply walking away from the build to rent market in Scotland, which is key to social and mid-market rental provision, but also traditionally grounded enough to be a consideration for pension fund-level investors.
Some are switching to student housing-led developments. One firm with permission for 151 homes in Edinburgh has this week put in a new planning application for the site for 301-bed student accommodation and 65 homes.
Square and Crescent declined to comment on whether this was as a result of the Holyrood legislation. However, planning documents show that in May 2022, prior to the September that year introduction of initial temporary rent controls, its plan was still for around 150 homes.
Separately, the Vita Group earlier had plans accepted for student accommodation for 267 in Edinburgh in place of a previously approved proposal by a different applicant for 90 build to rent homes.
READ MORE: Plan for more than 300 student flats at landmark city site
It said: "Interest in the site for BTR [build to rent] accommodation was withdrawn, however, when the Scottish Government introduced a ‘rent freeze’ from September 2022."
An industry insider said: "With Edinburgh, the supply and demand fundamentals in both residential and PBSA [Purpuse Built Student Accommodation] markets remain strong.
"There’s high demand and low levels of supply coming through, but the appetite from institutions, banks, investment funds for BTR has just drastically reduced, the same with Glasgow.
"The market is basically closed until there is more clarity on the implications."
READ MORE: Developer axes new homes as direct result of SNP, Greens rent curbs
Patrick Harvie, Tenants’ Rights Minister, responded: "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 that aim to improve affordability and strengthen tenants’ rights. This includes the introduction of an effective system of rent controls in the private rent sector, which will improve affordability for tenants while recognising the importance of landlords investing in property quality.
"Our European neighbours have shown that rent control can be compatible with ongoing investment, and we will continue to engage with stakeholders from across the sector on delivering our commitment to introducing a longer-term system of rent controls for Scotland. Alongside this, we are committed to encouraging new and different approaches to attracting investment into our housing sector and the launch of our new Housing Investment Taskforce this month is an important step in that work."
Also this week, deputy business editor Scott Wright turns the focus to business development and writes: "Can Glasgow afford to build a major new conference centre? A more pertinent question, perhaps, is can it afford not to."
The prospect of such a development has been raised by the chief executive of the Scottish Event Campus as part of a mooted £80 million expansion project.
Plus, business correspondent Kristy Dorsey reveals Edinburgh hoteliers are set to rake in huge profits from the legions of Taylor Swift fans, or "Swifties" heading to the Scottish capital this summer, with demand and prices for rooms through the roof.
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