Build to Rent is back in Scotland, guest blog by John Boyle, Director of Research, Rettie

Build to Rent (BTR) is an emerging housing tenure in Scotland. It usually involves big institutions (like pension funds) funding new development to rent. It has been successfully delivered at scale in many parts of the likes of Manchester and London and has a growing presence in many other UK cities. Its major advantage is that it can deliver new homes at pace and scale, including affordable homes.

However, it has been slow to take root in Scotland. We only have around 5,000 BTR homes operating here (mostly in Edinburgh and Glasgow and there is also a volume of BTR homes in Aberdeen and Perth). There is the clear potential to get this number up to 20,000 and possibly beyond in the next few years. The value of this potential development is around £2.8 billion.

Some of the recent Scottish BTR milestones include the £30 million purchase of Dandara’s Forbes Place development in Aberdeen (the first operational BTR scheme in Scotland) by the Germany-based ECE Living Fund. In Edinburgh, the Council is set to deliver a mix of Mid Market Rent (MMR), social rent and open market rent tenure homes through its Edinburgh Living operator at Forth Port’s Western Harbour site in Leith. In Glasgow, the Solasta 324-unit development overlooking the River Clyde was sold to US-based Hines Property Partners for £80 million.

Although there has been activity, politics has been a factor in hindering BTR in Scotland (the Scottish Government’s rent freeze froze the market). But viability issues have also had a dampening effect, as the costs of delivering has become more burdensome for new housing across all sectors (for example, build costs have been rising at twice the rate of rents in Edinburgh and Glasgow since 2022).

We tend to think of BTR as large multi-storeys full of flats but Single Family Housing (SFH) BTR has emerged as another category of housing, providing houses rather than flats, often in the suburbs of main cities, and aimed at families and downsizers. The viability challenges seem more manageable for this type of housing. We have only seen a few hundred or so units of SFH BTR delivered, but we believe that the country could get to a couple of thousand quickly with potential schemes in the Central Belt alone.

The Scottish Government’s new Housing (Scotland) Bill exempts BTR from its provisions, which are mainly around rent controls. BTR’s affordable cousin MMR is also exempted. The Scottish Government has also engaged with the sector through its Housing Investment Taskforce, which provides possible routes into unlocking more institutional funding into Scotland over the long-term.

With a more certain environment to operate in, BTR is capable of making a comeback in Scotland. In a country with a housing emergency, where there are significant issues around the availability and affordability of housing, we need more housing of all tenures, and quickly.