Scottish Ministers have confirmed the statutory carve‑outs that sit alongside the new rent control framework. From 1 April 2026, the Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026 remove build‑to‑rent (BTR) and mid‑market rent (MMR) homes from the cap that will operate in designated rent control areas, using powers inserted into the Private Housing (Tenancies) (Scotland) Act 2016 by the Housing (Scotland) Act 2025. The Local Government, Housing and Planning Committee backed the draft regulations in February ahead of commencement in April. (legislation.gov.uk)
What changes on the ground is precise. Inside a rent control area, the general cap will be set at CPI plus one percentage point, up to a maximum of 6 per cent; that cap will not apply to properties meeting the BTR or MMR definitions. However, the Private Residential Tenancy (PRT) rules continue to bite across the board: landlords may raise rent no more than once in any 12‑month period and must give the required written notice with a tenant right of referral to a rent officer. (parliament.scot)
For BTR, the regulations define an eligible property as part of a ‘relevant development’ of six or more homes covered by the same planning permission and held in the same single or joint ownership, with a completion date on or after 31 August 2021, and the property must appear on the landlord register. The 31 August 2021 date reflects Ministers’ original rent control policy announcement. (parliament.scot)
Completion status is evidenced in building standards terms. The ‘completion date’ is the acceptance of a completion certificate under section 18 of the Building (Scotland) Act 2003, or any earlier permission granted for temporary occupation under section 21(3). Providers should retain copies of the accepted completion certificate or temporary occupation letter for compliance files. (opsi.gov.uk)
The BTR exemption ends if the property changes use or status: for example, if it becomes owner‑occupied, is used as a short‑term let, or is no longer on the landlord register. Short‑term let status is defined by article 3 of the 2022 Licensing Order under the Civic Government (Scotland) Act 1982. Keeping units solely in PRT use and maintaining an active landlord‑registration entry are therefore ongoing conditions to preserve exemption. (parliament.scot)
For MMR, a property qualifies where rent increases are already constrained by funding terms or by the tenancy itself, and where those constraints prevent increases above a ‘specified level’-and the landlord does not in practice exceed that level. Funding restrictions can apply directly to the landlord or indirectly via a third party that received Scottish Government or local authority support for the property. (parliament.scot)
The ‘specified level’ for MMR is the median market rent for that size of property within the relevant Broad Rental Market Area (BRMA); where no figure exists for that size, the median for a similar size is used. BRMAs are the statutory geographies used by rent officers for Local Housing Allowance and are set out in Schedule 3B to the Rent Officers (Housing Benefit Functions) (Scotland) Order 1997. (parliament.scot)
Tenants in exempt properties retain PRT protections. Even where the Part 4A cap does not apply, tenants must receive the statutory notice of any proposed increase and can ask a rent officer to determine an open‑market rent. The annual‑only increase rule still applies. In short, the exemptions remove the cap mechanism but do not disapply the core tenancy safeguards embedded in the 2016 Act regime. (gov.scot)
Example: a 200‑home BtR scheme completed in October 2024, held in single ownership and continuously let on PRTs, will fall outside the cap if the local authority later designates a rent control area. The operator must avoid any short‑term‑let use and keep all units on the landlord register to retain exemption; the annual‑only increase rule and rent‑officer referral route remain available to tenants. (parliament.scot)
Example: an MMR flat owned by an RSL subsidiary with Scottish Government grant conditions limiting rent to the BRMA median for a two‑bed will be exempt provided the landlord does not set rent above that median. Should the rent be raised beyond the ‘specified level’, the property would cease to meet the MMR definition and the cap would apply in any rent control area. Providers should evidence their BRMA median calculations using rent officer data that underpin LHA. (parliament.scot)
For developers and investors, the policy intent-recorded by the Scottish Parliament-has been to mitigate stalled investment following the 2021 rent‑control announcement while protecting tenant safeguards. The committee paper confirms the CPI+1% (max 6%) formula in rent control areas and sets out why BTR and MMR were chosen for exemption after consultation. (parliament.scot)
Process points matter for compliance teams. Designations of rent control areas will proceed under the 2025 Act, with local authorities undertaking cyclical rent assessments to inform Ministerial decisions. The exemptions take legal effect from 1 April 2026; landlords and agents should verify landlord‑registration entries, retain planning permission references for relevant developments, and document any funding conditions relied upon for MMR status. (legislation.gov.uk)