Scotland’s private rented sector has seen rental growth almost stall with the latest data from Citylets showing national annual inflation falling from 4.4% at the start of 2025 to just 0.2% by year-end.
The slowdown coincides with the passing of the Housing (Scotland) Act 2025, which introduced new rent control powers and marked a major shift in the market.
Rents across Scotland’s major cities broadly remained steady throughout the year, with affordability, rather than demand, now the dominant factor in rental growth. Dundee was a notable exception.
After years of rapid increases driven by supply shortages, landlords now face a more balanced market.
VOLATILE CONDITIONS
The changes follow emergency legislation that previously restricted rent rises within existing tenancies, which contributed to volatile market conditions.
Citylets warns that caution is needed when using historic data to assess future market conditions, as previous policy interventions may distort trends.
Thomas Ashdown, Managing Director of Citylets, says: “The timing is of more than passing interest. Rental price inflation has been steadily cooling as affordability limits were reached and better market balance returned. Policy moved in one direction whilst the market moved decisively in the other.
“What we are now currently at risk of is previous policy-led market anomaly potentially informing future policy. It is absolutely imperative that analyses put forward by councils for their local market conditions both recognises and mitigates for the data during that emergency legislation era.”
The Housing (Scotland) Act 2025 comes amid broader macroeconomic relief, with lower inflation and interest rates providing material support for landlords, while giving tenants much-needed predictability after years of sharp rental rises.
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