The Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026 - Fairer Scotland Duty assessment

Summary of evidence

Tenants

The rent control measures set out in the Housing (Scotland) Act, are intended to stabilise rent levels and avoid the potential for rents to continue to rise more steeply between tenancies, by restricting rent increases in areas where this is necessary and proportionate for the purpose of protecting the social and economic interests of tenants in those areas. As set out in the Fairer Scotland Duty Assessment^[3] published when the legislation was introduced, these measures will support households in the PRS, including those who are on low incomes, to have stability, supporting efforts to reduce poverty and to improve outcomes for low-income tenants and their families. The measures are balanced by protections in the 2025 Act which safeguard the interests of landlords where appropriate.

There is some evidence that reduced supply and access to the PRS may have a disproportionate impact on lower income and other demand groups in housing need, compared to the general population.

In designing the rent control system, the Scottish Government acknowledges the importance of minimising any unintended consequences, including reductions in the supply and quality of the private rented stock in the longer term, as this would impact tenants, including those who are on low incomes or who are otherwise struggling financially.

While there is some data available about PRS tenants or rents which is specific to MMR and BtR tenants, much of the evidence which we are aware of relates to tenants in the mainstream PRS, whose experiences may be similar to MMR tenants or BtR tenants in some ways, but different in other ways.

There is some evidence suggesting:

• that tenants in the PRS as a whole may be more likely to earn less than owner occupiers, and more likely to be financially vulnerable or to be in relative poverty after housing costs.
• that tenants with lower incomes, in particular, may be more likely to face challenges in the PRS, including rent affordability.
• that access to affordable rents is an important factor in why tenants are living in MMR properties.

There is also some indirect evidence that rents may be a little higher than the PRS across most of the BtR, with the possible exception of rents at the top end of BtR where the gap might be greater (although noting that these rents often include amenities that tenants in the mainstream PRS may pay for separately).

Tenants in MMR properties

MMR housing is targeted at households on low to moderate incomes, which would likely benefit from rent controls. The evidence suggests that, whilst tenant experiences in the PRS can differ, tenants on lower incomes may be particularly negatively affected if the property they are living in is exempted from rent controls, as they would not have the same limits on rent increases that a tenant in a property which was not exempt would have.

However, it is important to consider the overall operation of the proposed exemptions. For an MMR property to be exempt, there would already be a contractual restriction on the level of rent increases which can be applied, for example as part of grant conditions set by the Scottish Government if there has been funding for the development of the MMR properties or as part of the tenancy agreement between the landlord and the tenant. Overall, MMR rents are likely to remain below average market rents for the area throughout the life of a MMR tenancy, whether or not a rent control area has been designated.

Furthermore, for a property to qualify for an MMR exemption the rent cannot exceed the median rent in the BRMA in which the property is located. If a significant part or all of the BRMA falls into an rent control area at any point, the median rent in the BRMA will tend to be reduced due to the operation of rent controls, and this will also help to ensure that MMR tenants are not adversely affected due to their tenancies being exempt.

These protections and the potential for a significant reduction in investment in MMR without an exemption should be taken into account when assessing the overall impact on tenants of the proposed exemption of MMR properties. Whilst rent control would provide an additional level of protection for those tenants living in an MMR property in a rent control area, removing barriers to investment in new supply is targeted at increasing the availability of MMR properties overall, allowing more tenants to benefit from lower rents, even where rent controls are not in place.

The Scottish Government’s view is therefore that the exemptions as set out still provide significant protection to tenants, while supporting continued investment in this important form of affordable housing. Investment in new MMR housing will also help to reduce pressure on rents across the private rented sector more generally, and potentially benefit tenants in the private rented sector even if they don’t live in an MMR property.

Purchases of existing properties to be used for MMR will also be exempt to support investment in this important form of affordable housing. These supply benefits have been carefully considered and balanced against the needs of tenants in the sector.

Tenants in BtR properties

BtR provision is not specifically focussed on low to moderate income households as is the case for MMR. The available evidence, while subject to some limitations, suggests that while tenants across a range of income levels live in this sector, on average BtR tenants are on higher incomes than the PRS as a whole. The Scottish Government acknowledges that BtR tenants do not benefit from the same restrictions on rents as MMR tenants, and that they will not have the same limitations on rent increases as tenants in non-exempt properties within a rent control area.

However, we consider that on balance there is greater benefit in removing barriers to investment in new-build properties, as increased supply will give tenants more accommodation options to choose from, and will also help to reduce overall market rents relative to what they would have been without such investment, which will benefit BtR tenants as well as private tenants more generally.

Awareness of rental rights

We note that the evidence also suggests that awareness of rental rights is low, and that there is also some evidence to suggest that low income tenants may be less likely to challenge landlords in circumstances where housing choice is constrained.

The right to challenge a rent increase which a tenant believes to be unreasonable, by applying to a Rent Officer, is part of the current protection available to tenants, and will also be the mechanism available to protect any tenants in a rent control area who live in a property which is excluded from rent control under these regulations. If tenants living in properties which are exempt from rent controls are not aware of their right to challenge an unreasonable rent increase, or do not feel that they can exercise that right, this may put these tenants risk of higher rent increases, which could potentially lead to their rents increasing at a higher rate than might otherwise be the case. The Scottish Government acknowledges that it will therefore be important to consider awareness-raising and support in the implementation of the rent control measures to address these findings.

In terms of general awareness-raising, the rent control measures in the 2025 Act includes a requirement for properties in a rent control area which are exempt from rent controls to include this information in property advertisements, which will support prospective tenants to make an informed decision about their tenancy and which may also raise awareness of rights around rents more broadly. Awareness-raising will also be part of the wider implementation of the measures in the 2025 Act.

Landlords

BtR and MMR landlords tend not to be natural persons (i.e. private individuals). While the criteria set out in the regulations will not exclude a private individual who is a landlord from benefitting from an exemption from rent control for their properties if they meet the criteria for that exemption, the available information suggests that private individuals are likely to be a small minority in these sectors.

The framing of the proposed regulations makes it likely that the exemption of BtR and MMR properties from the rent control measures will affect larger, institutional landlords, rather than individuals (who will often, although not always, have small portfolios). Landlords with properties in a rent control area which are not exempt from the rent cap will remain subject to the rent controls set out in the 2025 Act. The potential impacts of the overarching rent control measures on landlords was previously assessed as part of the suite of impact assessments which accompanied the Housing (Scotland) Bill 2024 at introduction. We do not consider that the proposed regulations to exempt specified properties from rent control will directly impact this group in any way which was not previously assessed.

We acknowledge the concerns expressed by some private landlords and their representatives, that an exemption for BtR and MMR properties could disadvantage landlords who do not meet the criteria for these exemptions and who would therefore be subject to rent controls.

However, for the reasons set out above, the Scottish Government is of the view that the exemption of BtR and MMR properties is supportive of future investment in the construction of new rented property, with the benefit to tenants that would come from a greater supply of new rental properties that could be delivered at scale. For MMR (new build and off-the-shelf) the expansion of this affordable form of housing, which comes with permanent restrictions on rent levels, will be of particular benefit to those who cannot access social housing but may struggle to afford private rents.

Furthermore, the Scottish Government is keen to ensure that individual private landlords in the PRS are not disproportionately impacted by the rent control measures in the legislation. For this reason, consideration is also being given to circumstances where it may be appropriate for a rent increase above the rent cap to be permitted in specific circumstances, in order to prevent some landlords being disproportionately affected where a rent cap is applied. Further engagement with the sector will be necessary as part of the assessment of possible impacts as the policy on this is developed further.