Scottish Ministers have signed off the Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026 (SSI 2026/158), made on 17 March 2026 and in force from 1 April 2026. The rules confirm that Build-to-Rent (BTR) and mid-market rent (MMR) homes are treated as 'exempt properties' under the Private Housing (Tenancies) (Scotland) Act 2016. Source: legislation.gov.uk.

What 'exempt' means in practice: in any rent control area designated under amendments made by the Housing (Scotland) Act 2025, the new Part 4A restrictions on rent increases will not apply to these exempt properties. Standard Part 4 rent-increase procedures under the 2016 Act continue to apply, including within rent control areas. For investors, the carve-out removes the sharpest cap risk from qualifying units.

BTR status hinges on a clear test. The property must be built, converted or renovated for residential use; form part of a 'relevant development' of six or more homes covered by the same planning permission and held in the same ownership; have a completion date on or after 31 August 2021; and appear in the owner's landlord-register entry.

The exemption ends at the earliest of four triggers: the owner moves in as their only or principal home; the property is used as a short-term let; the property is removed from the landlord register; or it is no longer part of the relevant development. The regulations also define conversion and renovation, covering change of use requiring planning permission and substantial works where the pre-renovation dwelling was unsafe or required demolition.

MMR status covers homes where rent increases are restricted either because the landlord (or a third party) has received public funding with conditions that limit rent increases, or because the tenancy agreement itself restricts increases. In every case, rents must stay at or below a 'specified level' set at the median market rent for that property size within the local broad rental market area (BRMA), as defined by the Rent Officers Order, or a similar-size proxy where necessary.

For the private rented sector, this is a policy signal with balance. Purpose-built rental blocks that meet the criteria are insulated from the most stringent area-based caps, while MMR remains pegged to local medians. That clarity should help appraisals, reduce policy risk premia in lending, and support forward-funding conversations for schemes nearing completion.

The completion-date rule will shape who qualifies. Eligibility is anchored to the acceptance of a completion certificate under the Building (Scotland) Act 2003, or earlier temporary-occupation permission. That sweeps in many post-pandemic BTR projects finishing from late 2021 onward, provided each unit has been used solely for private residential tenancies and remains on the landlord register.

Illustrative example: a 220-home BTR block in Glasgow completing in May 2026 and kept solely in private residential tenancy should qualify as exempt. If the local authority later designates the area for rent control, Part 4A would not cap rent increases for those units. Cashflows would still reflect market conditions and Part 4 procedures.

Illustrative example: a housing association in Edinburgh letting new flats at mid-market levels under Scottish Government-backed funding that limits rent increases to the BRMA median. Provided the funding and tenancy terms hold, these homes meet the MMR test and are exempt from Part 4A. For residents, affordability is anchored to local medians; for lenders, income visibility improves.

Tenants and operators should note the boundary lines. Tenants in exempt BTR buildings will not gain the extra cap that could apply in a rent control area, but existing tenant protections under the 2016 Act remain. Operators must keep properties on the landlord register and avoid short-term let usage or owner-occupation if they wish to retain exempt status.

Practical actions for owners and developers include checking that all units in a block sit under the same planning permission and ownership, maintaining continuous private residential tenancy use since completion, and retaining active landlord-register entries. Any break in these conditions can end the exemption mid-tenancy and alter the investment case.

Watch for the first rent control area designations and any local authority guidance on evidence at let-up and review. With the regulations live from 1 April 2026, expect deal terms, valuations and development finance in Scottish BTR and MMR to reflect the new carve-outs quickly, particularly in Glasgow, Edinburgh and Aberdeen.