Scotland a ‘no-go’ zone for investors under SNP rent controls

It comes amid speculation that Labour could consider introducing similar controls in England and Wales if the party wins power in the upcoming election.

An independent report commissioned by Labour has recommended capping rent rises. It proposed placing a “double lock” on rent increases so they would not be allowed to rise faster than local wages or inflation, whichever is lower.

Labour has said rent controls are not part of its policy platform amid concerns about unintended impacts on supply of lettable homes.

The value of build-to-rent transactions in Scotland plunged by 71pc between 2022 and 2023, according to Savills, falling from £224m to less than £65m.

Polly Simpson, who acts on behalf of developers to source investment for new housing at Savills, said investors will not even entertain a conversation about Scotland.

Ms Simpson said. “It’s just a no. There is not even a consideration of a pause. It’s: ‘no Scotland until we have got clarity on what long-term rent controls are going to be’.”

So far in 2024, there have been no build-to-rent transactions in Scotland whatsoever, compared to deals worth £555m across the rest of the UK.

Rent freezes have removed the sector’s ability to generate inflation-linked income streams for pension funds, who are often the financial backers of such projects. At the same time, the costs associated with running these buildings, such as energy bills, have surged.

“This means potentially creating a depreciating asset class,” Ms Simpson said.