Build-to-rent (BtR) projects had stalled following a three-year investment drought, but the Scottish Government introduced secondary legislation last year to exempt mid-market properties and BtR schemes from rent controls in a move welcomed by developers.
However, in the first quarter of the year, the number of BtR homes under construction across Scotland fell by 22% when compared with the previous year.
It is the largest drop among all UK nations, with starts across England and Wales falling by 17% and 12% respectively, while Northern Ireland experienced zero growth.
David Melhuish, director of the Scottish Property Federation, said that based on this trajectory, Scotland will soon exhaust its delivery pipeline as more schemes are completed compared to those starting.
Meanwhile, the number of new schemes in planning remains static, with Mr Melhuish urging the next Scottish Government to promote investment certainty.
The number of BtR units under construction in Scotland fell to 1,410 between January and March this year, compared to 1,812 in the same timeframe of 2025.
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Mr Melhuish said: “The continued decline in the number of BtR schemes starting on site represents a combination of the chilling effect that persistent policy uncertainty, especially around rent controls, has had upon investor confidence in Scottish BtR over the past four years, as well as the ongoing development viability challenges currently blighting the real estate sector.
“Given the continued pressure of construction costs, capacity and overall investor sentiment, this challenge unfortunately isn’t going to improve any time soon for either private or publicly led housing development.
“This is why it is absolutely vital that the next Scottish Parliament prioritises working with the private sector to address the development viability challenge.
“Further tax, regulatory and policy uncertainty is not likely to support new investment in Scottish BtR.”
Concerns for future projects have been highlighted as the number of BtR completions significantly exceeded those under construction, with a 14% increase of new developments completed in Q1 in 2026 compared to 2025.
Across the housebuilding sector, Scottish Government statistics showed a decline in all-tenure housing starts and completions in 2025.
There were 17,336 homes completed and 14,999 new builds started across every sector – an annual decline of 13% and 6% respectively.
The Scottish Government – led currently by the SNP – has vowed to build 110,000 affordable homes by 2032, but official statistics show the target is significantly off track, with just 32,479 homes delivered so far.
Fulton MacGregor, the SNP candidate for Coatbridge and Chryston, said the current Scottish Government is in the process of setting up More Homes Scotland, a quango aimed at increasing the supply of affordable housing.
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Its start-up costs are estimated to cost around £2 million and it will be operational from 2027-28.
Meghan Gallacher, the housing spokeswoman for the Tories, accused the SNP-led government of “years of reckless rent controls”.
She said: “This damning data exposes the scale of the challenges facing Scotland’s housing market which is broken on the SNP’s watch.
“Investment is falling and houses that have been built to rent have collapsed across Scotland.
“Years of reckless rent controls and excessive red tape have created a deeply damning effect that is driving developers away and making Scotland’s housing emergency even worse.”
The Tories, she said, would cut red tape and scrap the Land and Building Transaction Tax (LBTT), which is similar to stamp duty.
Meanwhile, Mark Griffin, the housing spokesman for Labour, said his party would deliver 125,000 new homes.
He said: “John Swinney and the SNP have let down renters in Scotland and fuelled Scotland’s housing emergency.
“Housebuilding has plummeted on the SNP’s watch and the number of new rental properties being built has been hit hard.
“The SNP’s litany of failure on housing has left Scots paying sky-high rents and struggling to find the right home.”
Mr MacGregor said: “This will build on record investment of over £4 billion over the next four years which will see us deliver 110,000 affordable homes by 2031-32.
“A re-elected SNP Government will also provide up to £10,000 in help towards a deposit for first time buyers and give renters new rights to buy the home they live in if the owner chooses to sell.”
Alex Cole-Hamilton, the leader of the Scottish Liberal Democrats, said his party would build an average of 25,000 homes each year, supporting 87,000 jobs.
“However, under the SNP homelessness has reached record levels,” he said.
“Thousands of children are stuck in temporary accommodation. Affordable housebuilding has collapsed. Too many young professionals are finding that they have no choice but to live at home with their parents.”
The Greens did not respond to a request for comment, however, the party opposed the rent controls exemption for BtR properties.
