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:Sorry—did you say “mid-market rent”, convener?

:Yes, it is. It is very much our intention to monitor the impact of these regulations, as we will monitor the impact of the act as a whole.

We have some core ways of doing that. One is that the function of administering rent control will require us to collect rents on a widespread basis across the whole of Scotland. Once that process is up and running, we will be able to observe any trends and respond to them if need be. A suite of national statistics on house building, homelessness and other areas will help us to do that, and we will keep a close eye on those statistics.

In addition, going back to something that the convener said, one of the most important ways to empower tenants and to keep matters under review is to ensure that, when a tenant looks at a prospective property, they understand at that point whether it is exempt from or subject to rent control. We have made provision for that in the act, too, so people will know that in advance and will go into tenancies understanding their rights, including the right to rent adjudication. The Government will then monitor carefully the impact that that has.

I want to restate that I think that this is absolutely the right thing to do for now. Supply and demand are very much out of kilter and we need to address that, which these measures will help us to do. They are made by regulation, so they can be reviewed in the future.

:We have framed this in response to the fact that there are different types of rental offer. We are not in any way intending to create a two-tier system; we are simply reflecting the different rental offers. Build to rent is a particular type of investment that requires a long-term return. If we want to encourage it in Scotland, which we do, we need to ensure that the conditions are right. Equally, mid-market rent is a really important, affordable offer. It is already subject to rent control, in a sense, as it is mid-market rent by the fact that the rent is controlled.

This is not about having a two-tier system, by any means; it is about having conditions that are right for the particular type of rental offer that we are talking about. That means that those offers may have to be treated differently, but not in a two-tier way.

:I will not say much more except to thank you for your comments. The legislation is a response to the larger piece of work to establish a national system of rent controls. This is a discrete bit of regulation that is not only about trying to offer the best balance between tenant protection and landlords’ rights, but also, crucially, about investment and growth in Scotland’s housing sector, which is critical if we are to rebalance supply and demand, which is required just now.

:The emergency is multifaceted and requires us to take different actions across the board, one of which was rent control, which was about protecting tenants from exorbitant rent increases. However, an equally important part of tackling the emergency is ensuring that there is investment in our housing sector. I need that not only because more investment means more properties and more choice and can drive down prices, but because I need the whole sector base to grow so that we can deliver the all-tenure properties and affordable properties that we need. We should not forget that, although rent control across the country is the baseline, the exemptions are being put in place to offer clarity and create the conditions for confidence and growth that we need in order to have enough rental homes, to drive up availability and to drive down costs.

:The exemptions will apply only as long as the cost restrictions that are set out for mid-market rent, whether because of public money or because of the tenancy agreement, are met. Where rent increases are made that take the rent outwith the rules of the agreement, the exemption will no longer apply. Therefore, rent controls could operate and those tenants might find themselves in a rent control zone with rent capped at the consumer prices index plus 1 per cent.

Regardless of the exemptions, the rent adjudication service will apply to tenants of mid-market-rent and build-to-rent properties. It is worth noting that the Housing (Scotland) Act 2025 extended the time in which a tenant can request rent adjudication from 21 to 30 days, if I remember the timescales correctly—Shaun Cassidy is nodding. We also made changes so that the rent adjudication service could not set the rate above that which was recommended by the landlord.

To answer your question, the tenant is protected by the terms of the exemption for mid-market rent in the first instance. They then have the rent adjudication process to help them, and the 2025 act has strengthened that process.

:I have no plans to change the definition of build-to-rent properties for this exemption. As I said earlier, it is the right response just now, while we are in a housing emergency and need to increase supply significantly. We are obviously at the end of a parliamentary session, and a new Government will therefore be coming in. As far as I am concerned, however, the definition will not change.

The committee will have heard about the time period for build-to-rent exemption. I chose not to put a time limit on that because, right now, with the situation that we all face in Scotland, we need to create as much long-term certainty as we can for investment in the sector. That is not just so that the build-to-rent sector grows; it is so that all tenures grow. As you know, Ms Tweed, we need the contractor base and the whole housing sector’s capacity to build, so that we can have all tenures and—crucially—so that we can get the 70 per cent of social properties built before our next target time limit. The definition is right just now, and I do not have any intention of changing it.

:Yes, but there ought to be nothing to prevent them anywhere—that is the point. When investment decisions are made with the prospect of a long-term return, particularly for build-to-rent properties but also for mid-market rent properties, I want investors in those properties to know that, because they have the exemption in law, they can have confidence that they will not be subject to rent controls, even if one is to arise in the area where they are operating. It is about telling investors from the outset that they can have confidence, make their investment decisions and invest in Scotland knowing that, within the parameters of the rules, they will not be subject to rent control.

Good morning. I thank the committee for the opportunity to give evidence on the regulations.

The Housing (Scotland) Act 2025 introduced a long-term system of rent controls for Scotland. It is essential that those protections are in place for tenants and that they are balanced in respect of landlords’ property rights. It is also important that they support continued investment in new, long-term rented homes. In a housing emergency, we must increase the availability and, in turn, the affordability of rented housing in Scotland. As a Government, we have worked hard to get that balance right. During the passage of the bill, we engaged with MSPs across parties and we carried out a full public consultation to gather views on how to create the right exemptions from rent controls. Our housing investment task force also considered how exemptions could support future investment in rented housing.

Since the 2025 act was passed, we have continued to engage with stakeholders, including local authorities, the Scottish Federation of Housing Associations, the housing investment task force, and landlord and tenant representative groups. We have now set out these exemptions with the intention of providing clarity, addressing reported barriers to investment in new rented housing, and maintaining the attractiveness of Scotland as a place to invest.

I will give a touch of detail. The proposed exemption for mid-market rent will apply only in cases where a restriction on rent increases is already in place. That could be where public funding creates a direct or indirect restriction on increasing the rent, or where the terms of the tenancy speak to such a restriction. Layering additional rent control measures on top of that would create unnecessary complexity and would not, in fact, bring any benefits to tenants. Whether the restriction is in place via funding or the tenancy agreement, rent increases for the property must be limited to a specified level.

The exemption requires that rents remain at or below the median for properties of a comparable size in that broad rental market area, as published on an annual basis by the Scottish Government. Where the landlord fails to keep their rents below that level, they will no longer qualify for exemption from rent control.

The exemption for build-to-rent properties is aimed at supporting much-needed investment in new purpose-built homes for rent and the retention of those homes in the private rented sector. Under this exemption, groups of six or more residential properties that share the same planning permission, that are owned by the same person or group and that were constructed after the date of the announcement will be exempt. As well as new builds, properties that are converted for residential use and derelict properties that are returned to use will be included.

That exemption will no longer apply where the nature or use of the property is changed. For example, if the property was used as a short-term let or occupied by the owner, it would no longer be eligible for exemption. That is about ensuring that the exemption acts to support the long-term supply of rented homes.

Landlords of exempt properties in rent control areas will need to confirm their exempt status. We are working to ensure that that administrative process is smooth and that tenants know whether a property is exempt and understand their rights in those circumstances. The verification process for that will be set out in due course.

In summary, the regulations will remove the perceived barriers to investment in mid-market and build-to-rent properties, which will support future investment and help to ensure a strong supply of rented properties. Most importantly, they strike the right balance between tenant protection and landlords’ property rights.

:Our objective was to act swiftly to restore confidence in investment and to do that with the clearest, most straightforward regulatory provisions. One of the challenges in doing that was defining build-to-rent developments, and it is quite right that you ask about the extent to which both urban and rural circumstances were considered. The six-property limit is tied to the land and buildings transaction tax regime in Scotland, but it also reflects rural requirements. When many of us think about build-to-rent developments, we think of inner-city projects of hundreds of units. Making the limit six units, which is quite small in comparison, is about trying to capture rural needs as well as aligning with the LBTT system.

I have looked through the evidence that the committee has heard, and I think that Scottish Land & Estates—forgive me if it was not that organisation that raised this—wanted the limit to be a little lower than that. However, I think that a six-unit limit strikes the right balance between what we traditionally think of as a build-to-rent development and the low number that is needed to capture rural developments.