How rental caps and an eviction ban have impacted Scotland's rental market

We analyse the numbers to see how both landlords and tenants have reacted to the legislation.

Published under Buy-to-letRenting and Research — Apr 2023
How rental caps and an eviction ban have impacted Scotland's rental market

Last year, the Scottish parliament introduced a 3% rent cap and a moratorium on evictions for existing tenancies in a bid to lessen the impact of the cost of living crisis. The measures were then extended in September 2022 and are expected to stay in place until September 2023.  Arguably, the Scottish government have been more active over the last few years about introducing regulations within the private rented sector than other nations, and we’re now starting to see how some of these changes are playing out.

Our latest data shows that buy-to-let purchases in Scotland have fallen to a record low.  So far this year just 6% of homes sold in Scotland were bought as a buy-to-let, down from 8% in 2022, as appetite to invest in a more regulated rental market has dwindled.  While typically there have been fewer landlord purchases in Scotland than in Great Britain, it’s likely that some of the heightened regulation has disincentivised further buy-to-let purchases.

Furthermore, the proportion of homes being sold by a landlord in Scotland has reached a record high as investors seek to cash-in once their tenant have left.  Landlords made up 14% of all sellers in Scotland so far this year, up from 10% in 2022.  Meanwhile across Great Britain, there have been no signs that a landlord sell-off has accelerated.

While the measures have provided much-needed relief for tenants, it has put financial pressure on landlords at a time when costs are rising sharply.  While the rental cap has limited rental increases on to existing tenancies, more landlords are seeking to pass on their higher costs by hiking the rent for new tenants. This is one of the reasons why the average rent on a newly let property in Scotland rose 8.3% year-on-year in February.  Rental growth in Scotland has outpaced the Great Britain average for 8 out of the last 9 months.  

The long-term impact of these measures remains to be seen.  However, if these trends continue, the rise in landlord sales and lull in landlord purchases is likely to weigh on the number of private rented homes available to tenants in Scotland this year.  In turn, this will likely put further pressure on open-market rents, albeit dampened to a degree by affordability pressures.


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