The Housing (Scotland) Bill has cleared its final parliamentary hurdle, with Royal Assent expected before the end of 2025.

After months of consultation, we now have what appears to be a balanced piece of legislation that attempts to address the housing emergency declared by the Scottish Government in May 2024 while maintaining the investment certainty needed to expand housing supply.

The bill gives Scottish ministers the power to create rent control areas following a process that includes reports from local authorities assessing the conditions in their area. In these areas, rent increases will be capped at CPI+1%, with a maximum of 6%.

This measured approach is particularly significant for Scotland’s larger cities, where housing pressures are most acute. The framework allows for a targeted response that recognises the different conditions across Scotland’s housing market.

Crucially, the first local authority reporting period ends on 31 May 2027.  Consequently, rent controls are not expected to come into effect for around 18 months at the earliest, giving the sector time to adapt.

This phased approach demonstrates a pragmatic understanding of the need for orderly transition.

The Scottish Government has acknowledged that certain categories of property should be exempt from rent controls. Housing secretary Màiri McAllan has confirmed plans for secondary legislation to exempt both build-to-rent and mid-market rental accommodation.

These exemptions represent clear evidence that the Scottish Government has listened to the sector. Build-to-rent and mid-market rental have the potential to be instrumental in increasing housing supply, and the proposed exemptions recognise their potential contribution to addressing Scotland’s housing needs.

Following the bill’s receipt of Royal Assent, we anticipate the exemptions will follow quite quickly through secondary legislation, providing clarity for investors before rent control provisions take effect.

Purpose-built student accommodation will also remain exempt from rent controls, though the sector will see changes in other areas, with statutory notice periods expected for early termination of tenancies.

Perhaps the most significant outcome of this bill is the prospect of regulatory stability for Scotland’s housing sector. The sector has felt uncertain for some time, with various initiatives and emergency measures creating a challenging environment for planning and investment.

The passage of the bill suggests that the Scottish Government has genuinely listened to the concerns of investors, landlords and developers. The result is legislation that attempts to protect tenants through enhanced rights and rent controls while providing the regulatory certainty needed to maintain investor confidence.

Practical steps for the sector

As the bill moves towards implementation, there are several practical considerations for those operating in Scotland’s housing sector:

• Engage with the process. Secondary legislation on exemptions is expected following further stakeholder engagement. Active participation will help ensure the regulations are workable and provide the clarity the sector needs. 
• Review your portfolio now. Assess which properties may fall within rent control areas and which may benefit from exemptions. Understanding your exposure at this stage allows for better strategic planning. 
• Ensure clear documentation. If you are developing or operating build-to-rent or mid-market rental properties, ensure your documentation clearly establishes eligibility for exemptions when regulations arrive. 
• Monitor local authority activity. The designation of rent control areas will depend on local authority reports. Staying informed about what your local authority is saying will help you anticipate potential designations. 
• Seek specialist advice early. The interaction between primary and secondary legislation can be complex, particularly where exemptions are concerned. Early legal and financial advice can help navigate the new framework and avoid costly mistakes. 

The coming months will be critical. Royal Assent will be followed by secondary legislation on exemptions, and then a phased introduction of rent control provisions. This timeline gives the sector breathing space to understand the new framework and adapt accordingly.

The commitment to exempt key growth sectors from rent controls is encouraging, and the phased implementation demonstrates an understanding of the practical realities of housing investment.

The bill represents a balanced approach, and the evidence that the sector has been heard gives reason for cautious optimism.