Housing (Scotland) Act 2025 - BtR and MMR exemptions from rent controls
The Housing (Scotland) Bill received Royal Assent and became an Act – the Housing (Scotland) Act 2025 (the “2025 Act”) in November last year.
After debate at the Bill stage of the 2025 Act it was settled that Build-to-Rent (“BTR”) and Mid-Market Rent (“MMR”) properties would be excluded from the rent control regime to be introduced by the 2025 Act.
The Scottish Government has now published (and laid before the Scottish Parliament) a draft Scottish Statutory Instrument called “The Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026” setting out the exemption criteria for MMR and BTR. If approved by the Scottish Parliament, the regulations will come into force on 1 April 2026.
What the regulations do
The Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026 (the “Regulations”) commit to law that BTR and MMR properties will be “exempt properties” for the purposes the 2025 Act. This means that the rent control procedures will not apply to qualifying BTR and MMR properties as exempt properties.
Proposed exemption criteria: BtR
As proposed, a BTR is a property that is:
- built, converted or renovated for residential use;
- forms part of a relevant development;
- constructed and has a completion date after 31 August 2021; and
- is included in the landlord’s entry in the Landlord Register.
A “relevant development” means a group of six or more properties (i) covered by the same planning permission, (ii) owned by the same person or group and (iii) which have since first occupation been used continually in the rental market for lease under a private residential tenancy. This means that a property will cease to form part of a “relevant development” (and therefore the exemption will fall away) if at any point (or for any period) the property is used for a purpose other than rental, i.e. the property becomes owner-occupied or is used for a short term let.
The Regulations define what is meant by conversion and renovation for residential use and “completion date” by reference to the Building (Scotland) Act 2003.
Proposed exemption criteria: MMR
As proposed, a MMR is a property:
- where the landlord is restricted, in terms of the tenancy agreement, from increasing the rent in specified circumstances; or
- the landlord receives, or has received, funding from the Scottish Government or a local authority, and the conditions attached to such funding restrict the landlord’s ability to increase the rent.
The restrictions in each case must in effect prevent the landlord achieving rent above a “specified level”. The specified level is anchored to the median of market rent for the relevant market area.
Conclusion
It is hoped that the draft Regulations offer confidence and clarity for BTR and MMR investors. If approved by the Scottish Parliament, the Regulations will come into force on 1 April 2026.
This update follows on from our previous updates on the Bill, which go into further detail on the key provisions of the Bill (and now Act) and the potential implications for stakeholders. A link to our previous update can be found here: Housing (Scotland) Act 2025: Key Updates and Next Steps
