Rental growth in Scotland dipped from 4.4% at the start of last year to just 0.2% by year-end, according to the latest figures.

Citylets reports that the falling rate of annual rental inflation coincided with the passing of new rent controls under The Housing (Scotland) Act 2025 and warns that local authorities will need to use caution when analysing markets.

Under the Act - expected to be introduced by next year - ministers will be able to designate parts of the country as Rent Control Areas where landlords can only increase rents in line with inflation (as measured under the Consumer Price Index) plus one percentage point, capped at 6% per year.

After years of sustained upward pressure, rents across Scotland’s major cities broadly remained steady throughout 2025, moving within a narrow range around zero, except for Dundee. Affordability, not excess demand, has become the dominant factor in rental growth, says MD Thomas Ashdown (pictured).

Turbulent

The sea-change follows one of the most turbulent periods in the Scottish PRS where rents on the open market rose rapidly in response to the dearth of supply which was largely attributed to the introduction of emergency legislation. This prohibited or limited the raising of rents within existing tenancies.

Ashdown comments that 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.”

He adds: “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.”

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