By John McGuire, Director at Thomas and Adamson, part of Egis Group:
Scotland’s housing market is entering a pivotal phase as the 2025 Housing (Scotland) Bill seeks to redefine the rental landscape. By giving tenants more protection and making the delivery of new homes clearer, the Bill marks a significant shift for the sector, and it brings both challenges and opportunities.
While build-to-rent (BTR) sits outside its core provisions, the debate over what counts as BTR in secondary guidance will be closely watched, particularly given the speed of change and the uncertainty it has created for investors. This process is not just about clarification, it is also a chance to restore confidence and bring capital back into the market, positioning Scotland as an attractive choice for developers and a hub for innovative housing models.
BTR was once heralded as a solution to Scotland’s housing shortage, offering high-quality homes in city centres that appealed to young professionals and families. For a time, momentum was strong, with landmark developments such as McEwan Quarter and Bonnington Road Lane in Edinburgh, alongside the major developments of Holland Park and Central Quay in Glasgow, showing that Scotland could replicate successes seen in London and Manchester. Investors were engaged, and developers were committed to delivering projects combining modern amenities with long-term rental stability, creating the sense that the sector was poised for sustained growth.
That optimism was tested when rent caps were introduced in 2022, changing the market almost overnight. Investor confidence fell sharply, developer appetite waned, and sites earmarked for BTR were repurposed for student accommodation or co-living models. Funding streams dried up, and some projects were paused indefinitely.
In 2025, demand for BTR is high, especially in central belt cities, with occupancy rates in many developments over 90%, however delivery challenges persist as Scotland’s pool of tier-one contractors remains limited. Alongside this, tenant affordability pressures are acute, and high construction costs coupled with regulatory requirements make it harder for developers to bring projects to completion on time and on budget.
While the Housing Bill adds another layer of uncertainty, it also signals progress. Excluding BTR from rent controls is a positive step, even if investors remain cautious until details are confirmed. For a capital-intensive model like BTR, knowing in advance the likely rental income and running costs is essential before committing to multi-million-pound schemes. Clear legislation and stable conditions will be key to restoring confidence and ensuring Scotland does not lose momentum to other UK regions with more stable regulatory environments.
Despite previous challenges, there are many reasons to be optimistic. Interest in BTR is rising again, as developers move forward to avoid losing planning permissions. Contractors are showing more interest as they diversify beyond the public sector, and planning departments in Edinburgh and Glasgow are becoming increasingly familiar with the sector, which will help projects navigate the approval process more smoothly.
Innovation is also reshaping the market, with co-living concepts gaining traction. These schemes blend elements of BTR, purpose-built student accommodation, and flexible tenure models, appealing to younger renters seeking affordability and community while offering developers a way to make projects more financially viable. Single-family lots are also emerging as another promising option, driven by lower land prices and the need for affordable housing. Popular in the US, this model could help Scotland address shortages in suburban and regional areas, spreading risk across multiple units rather than concentrating capital in high-rise towers, and offering a more diverse mix of housing options.
External factors are influencing design choices too. In England, the Building Safety Act 2022 has prompted developers to consider low-rise alternatives, and Scotland, with fewer regulatory hurdles, could become an even more appealing destination if investor confidence returns. Developers such as Platform are already exploring opportunities in regional cities like Bristol and Leeds, signalling that the wider UK market remains strong.
The fundamentals of BTR continue to attract developers and investors, and this interest shows no signs of fading. The sector offers a route to delivering more homes in areas where demand is greatest, and if Scotland can provide a stable regulatory environment and showcase successful schemes, confidence will return, and the sector can thrive.
The next 12 to 18 months will be decisive for the market. Engagement with policymakers and developers is essential to ensure future regulations strike a balance between protecting tenants and giving investors the certainty they need to move forward. Scotland’s housing market is evolving rapidly, and BTR can play a central role in meeting demand. With the right approach anchored in clarity, adaptability, and innovation, the sector can overcome current challenges and deliver long-term benefits for tenants, investors, and the wider Scottish economy.