The Scottish parliament has agreed to limit rent increases to CPI+1%, to a maximum of 6% for properties in rent control areas.
This is a more relaxed form of rent controls compared to the previous blanket 3% rent cap.
David Melhuish, director of the Scottish Property Federation, said: “We are pleased that the Committee recognised the importance of allowing modest, inflation-linked increases in rents for properties included within rent controls areas, albeit passed by a narrow vote on an amendment tabled by the Scottish government and supported by SNP and Labour Committee members.
“If we must have rent controls, then they need to be investable and pragmatic controls. The proposed formula of CPI +1%, to a maximum of 6%, achieves this and brings the necessary clarity and certainty for both investors and tenants alike.
“This is critical at this time if we are to kickstart investment in new supply of build to rent and mid-market rent in Scotland.”
Rent controls are a controversial subject in Scotland, as they have reportedly driven down the number of build-to-rent projects in the country.
Melhuish added: “We are still concerned that other key amendments to the Bill will undermine this progress.
“In particular, the recently passed amendment to introduce rent controls on student tenancies raise serious viability questions about future investment in the Scottish PBSA market.
“Of equal concern is the government’s recent commitment to introduce a 28 day notice to quit period for students.
“Unless clearly specified as for exceptional circumstances, this measure will significantly undermine the basis of investment into the sector.”