Scotland continues to have the sharpest fall in build-to-rent construction starts of any of the four UK nations.
Build-to-rent projects are considered critical in Scotland as the country navigates a housing emergency.
Projects had been stalled following a three-year investment drought, but the Scottish Government introduced secondary legislation last year to exempt mid-market properties and build-to-rent schemes from rent controls.
But the number of built-to-rent homes under construction in Scotland has fallen by 27% in the last year, according to analysis by Real Estate: Scotland and Savills.
It is the biggest percentage drop across the UK, with the number of homes under construction in England falling by 21% and 9% in Wales, while Northern Ireland recorded no change.
Housing experts have warned the Scottish Government that the built-to-rent sector needed urgent support to tackle the financial viability of projects.
The industry body, which represents more than 500 organisations in investment and development, warned that combined challenges in construction costs, delivery capacity and investment mean many build-to-rent projects never make it out of the planning stage.
Anamika Dwivedi, senior policy officer at Real Estate: Scotland, formerly the Scottish Property Federation, said: “The 27% fall in the number of build-to-rent homes under construction is further evidence that the viability pressures affecting housing development are becoming more severe.
“Although the modest increase in the number of homes in planning provides some grounds for longer-term optimism, significant headwinds remain. Construction costs, delivery capacity, regulatory requirements and subdued investor sentiment are all making it harder for schemes to progress.
“It is therefore imperative that the Scottish Government puts viability at the heart of its upcoming Programme for Government and carefully considers the effect of any new policy proposals on investment and the delivery of new homes across Scotland.”
A total of 1,466 homes were under construction in Scotland in quarter two of 2026 – April through to June.
That is down from 1,995 during the same quarter last year. However, it is a slight increase from the 1,410 built-to-rent units under construction between January and March this year.
Another positive highlighted by the industry body is that the number of build-to-rent projects in the planning stage increased by 3% compared with the same period last year.
But Ms Dwivedi said the continued fall in homes under construction suggested that too few proposed developments are progressing from planning to delivery, which is exacerbated by the “acute challenges” in making the build-to-rent schemes financially viable.
First Minister John Swinney will deliver the next Programme for Government next month when the Government’s policy priorities will be set out.
A Scottish Government spokesman said: “We are providing a record investment of up to £4.9 billion over the next four years to support the delivery of more affordable housing and we have taken significant action to support the build-to-rent sector in response to calls from industry.
“The Housing Act made provision to exempt build-to-rent and mid-market rent homes from rent control, which the sector made clear was required to support more quality homes. Ministers now expect to see progress on delivery following these changes.
“Ministers will continue to work closely with industry to ensure the conditions are in place to support investment in more quality homes.”
Earlier this year ministers were told by property chiefs that the pipeline for new build-to-rent homes was close to exhaustion, after figures showed the number of completions exceeded the number of new starts.
The Scottish Government declared a housing emergency in May 2024, with more than 18,000 households in temporary accommodation.
Last week, it was revealed that Glasgow missed its targets for the delivery of new affordable homes, with warnings that construction was being stalled by rising costs.
The council secured approval for 557 homes, despite aiming for 921, and there were 947 site starts when there was a 1,271-home target.
Councillor Ruairi Kelly, the city convener for housing, said the landscape for delivering affordable housing had not become easier despite a housing emergency being declared.
