Investor doubts hit construction of build-to-rent homes – Daily Business

The number of build-to-rent (BtR) homes under construction across Scotland has dropped by 26% in the past 12 months, according to the latest analysis from the Scottish Property Federation (SPF) and Savills.

In addition to the “significant” decline in the number of units under construction in the first quarter of this year when compared to the same period last year, Scotland has recorded zero growth in the number of new BtR schemes being submitted for planning.

The report says the slowdown in construction activity, and the lack of growth of new schemes being taken through planning, are the consequence of the ongoing rent control proposals and reflective of the diminished confidence of investors.

The total number of BtR units under construction in Q1 2025 is down to 1896, from the prior year figure of 2545 homes.  This compares to England, where although construction activity has slowed, the decline is far less significant and is, in part, countered by a growth in the future pipeline of schemes working their way through the planning system.

The lack of new schemes in the planning pipeline sees the total number of units standing at 10,829. This compares unfavourably with England which has recorded a rise of 6%.

On the total number of new BtR homes delivered as existing schemes are built out, there has been an increase across Scotland of 1,152 homes (43%), compared to 15,786 (15%) in England.

David Melhuish, Director Scottish Property Federation, said: “This disappointing evidence of zero growth in new BtR applications is sadly not surprising and echoes what we have been saying for years as a sector to the Scottish Government.

“These figures are the natural consequence of a lack of investor confidence over the last three years in the future of Scotland’s build-to-rent sector as a result of persistent policy uncertainty, especially around rent controls.

“Looking forward, we urge the Scottish Parliament to agree to amend the Housing Bill in line with the government proposals on an inflation related and capped rent control mechanism. If introduced with incentives for new build rental homes, including mid-market rental homes, this will we believe begin to restore investor confidence in the future of Scotland’s BtR sector.

“While construction activity has slowed across the whole of the UK, Scotland has seen the most significant fall. Unless the Scottish Government moves to restore investor confidence through supporting new build and amending some of its more controversial policies such as between tenancy rent controls, then we will soon exhaust the new supply pipeline of BtR homes as no new planning applications are coming forward and those with approval are simply not being progressed.”