What does Scotland’s PRS tell us about the future for England

What does recent research tell us about the likely direction of travel of the private rented sector over the next thirty years?

Intensive regulation over the last 10 years or so has reshaped the private rented sector (PRS) across the UK islands, the nations of Scotland, England and Wales, as well as in the Irish Republic.  The long-run trajectory is now visible: fewer small-scale landlords, more compliance obligations, and a market drifting towards more institutional control, that is unless there’s a change of course in governments?

Long-term research

Dr Andrew Robert Watson’s recent assessment of Scotland’s private rented sector – the subject of his recent report, The changing characteristics and motivations of Scottish private rented sector landlords and their investments – 30 years of surveys - is indicative of trajectory in all the four nations and one of the clearest warnings yet for policymakers and landlords. 

His report shows a sector drifting steadily away from the traditional small-scale landlord model, from the accidental landlords or the one or two buy-to-let portfolios, to one that’s becoming more fragile and problematic. First in the Irish Republic, with its Residential Tenancies Act 2004 (as amended) the Housing (Standards for Rented Houses) Regulations 2019 and more recently its Residential Tenancies (Amendment) Act 2025 to extend and expand the operation of Rent Pressure Zones (RPZs) to cover the entire country until 28 February 2026. 

In Scotland, recent Scottish rental history is defined by major reforms like the Private Housing (Tenancies) (Scotland) Act 2016 introducing the new private residential tenancy from December 2017, ending no-fault evictions and creating an open-ended agreement. The Act made all the grounds for recovery of possession discretionary.

More recently, during Covid, the Cost of Living (Tenant Protection) (Scotland) Act 2022 temporarily froze rents and introduced a rent cap and an eviction moratorium to address the cost of living crisis in Scotland. These measures transitioned from temporary to a permanent basis following several extensions.  

In Wales, and more recently in England compliance burdens have multiplied. 

Scotland and the Irish Republic introduced reforms earlier and more frequently, regulation was effectively a decade ahead of England in policy terms. The result: a slow but persistent squeeze on participation, falling landlord numbers, and a sector that risks hollowing out unless incentives are introduced to rebalance the equation.

Ireland’s path was different in form but not in direction. The national expansion of Rent Pressure Zones, combined with strong tenants’ rights, an effective cap on rental growth which compressed yield potential. The Irish state leaned heavily towards intervention in the sector, without a corresponding policy of encouraging new rental supply, the regulatory pressure ultimately landing on both landlords and tenants. 

Recent legislation in Wales was dominated by the Renting Homes (Wales) Act 2016, which came into full force on 1 December 2022. Key changes included replacing tenancies with "occupation contracts" for both private and social landlords, making them known as "contract-holders" instead of tenants and increasing security of tenure, introducing new fitness for human habitation standards, and abolishing most letting fees through the Renting Homes (Fees Etc.) (Wales) Act 2019.

England finally succumbed to the trend by introducing the Renter’s Rights Act 2025 which comes into force on Friday 1 May 2006, after a whole series of other more minor legislative changes over the last ten years, not least Section 24 of the Finance (No. 2) Act 2015, which eliminated full mortgage interest relief for individual landlords, replacing it with a tax credit calculated at the basic rate of 20%. 

Dr Watson’s research is instructive not least because all these jurisdictions are on parallel tracks, albeit with differing legislative details. Between them, for example the Renters’ Rights Act in England and Ireland’s sweeping nationwide Rent Pressure Zones, all four jurisdictions are on a converging path. They’re following a socially inspired regulatory model that prioritises tenant protections while placing growing demands on private landlords. 

There’s a very straightforward question here: if the past ten or twenty years have pushed the respective private rented sectors to where they are today, where are they likely to be in twenty to thirty years? And what can small-scale landlords do realistically to survive the legislative onslaught?

What of past developments?

Scotland, the focus of Dr Watson’s research, being ahead of England by several years, is perhaps a good indicator of the rest, and a good place to start this analysis. The driving force in Scotland, as in the other jurisdictions, has been near-constant policy churn. The introduction of the Scottish Private Residential Tenancy (PRT), rent caps, pandemic measures, open ended tenancies, enhanced notice periods and now the Housing (Scotland) Act 2025, all of which have left Scottish landlords reeling. 

Watson’s analysis (report) shows not just the impact of each measure individually, but the cumulative friction they have created. Scotland’s landlord register data is an indicator of a broad underlying trend: there are fewer active landlords and there’s a modest rise in average portfolio size for the remainers. 

This is a classic pattern being repeated across the jurisdictions; a pattern of smaller operators downsizing or leaving the sector, while others take the expansion route and become mid-sized landlords, benefiting from economies of scale and learning how to absorb the shocks.

England is no exception to the others and tells a similar story. It is about to enter the familiar ground already trod by The Irish Republic, Scotland and to some extent Wales. England is shortly to undergo the biggest structural change since assured shorthold tenancies were created by the Housing Act 1980 (as amended many times). 

The Renters’ Rights Act abolishes Section 21 leaving the adversarial Section 8 process as the only route to eviction. It abolishes fixed term tenancies, restructures rent review mechanisms, lengthens notice periods and expands a legal minefield surrounding possession. Implementation begins in earnest next year but already the behavioural effects have started to show as landlords pre-emptively de-risk or sell-up. 

So, the pattern across all four letting markets is unmistakable: more rules, more cost, less profit on a small-scale, more friction and hassle, but no let-up in tenant demand in what has been a steady shrinking supply of good quality rental housing.

Where are we at now?

In Scotland, landlord registrations have fallen around 5% over a five-year period while the typical remaining landlord now holds slightly more property. That is a consolidation of the market in slow motion. It’s not a crash, but a steady narrowing of participation by the traditional one or two property buy-to-let landlord. 

The sector has fewer but larger operators, is more professional and of necessity landlording in 2025 is becoming a full-time occupation. But the sector, according to Watson, is “brittle”, because if one of the mid-sized landlords exits, a large chunk of rental supply just disappears all at once.

In England many new laws have been introduced over the years, but its weak enforcement capacity in local authorities severely limits their effectiveness. Cash strapped local authorities’ prosecution rates for housing offences have historically been extremely low. This is not because breaches don’t occur, far from it, but because councils lack the people power, the money and the control systems to pursue the rogues and the unsafe rentals in their jurisdictions. 

Poor enforcement has been the history of the English PRS and there’s no real indication – without considerably more resources being made available - that the Renters’ Rights Act will be any different from the past, no more effective than the status-quo, which is patchy and inconsistent.

Scotland and Ireland, with their separate housing tribunals, sit somewhere between, with stricter controls, active regulatory engagement, but still with chronic undersupply and a landlord base that is shrinking year on year.

So, according to Dr Watson the present-day situation is high rental demand high, fragile supply, tightening regulation and thinning participation.

This is the launchpad for the next thirty years.

So, what can we discern as the main drivers for the next 30 years?

Each jurisdiction is adding legislative complexity and government intervention. Energy rules, licensing schemes, registration of landlords, procedural requirements, new tenancy types and notice rules, rent regulation, and enhanced safety reporting. Compliance is becoming a by-word for renting out residential property and forms part of the overhead of managing property. It calls for economies of scale (larger portfolio sizes) to make renting pay.

Financing expansion (investing more into housing) has become more difficult as interest rates have shifted to a more normal level since the almost zero interest rate era following the economic crash of 2008 and Covid. Landlords have become exposed to narrow rental margins, with no reform of landlord tax reliefs, which directly influence exit behaviour. Many landlords today are just one policy change away from selling-up.

On the other hand, demand for rental homes is very strong, in all these separate markets. Household formation is rising faster than new housing can be constructed across the board, no doubt influenced by high levels of immigration. It’s the one thing keeping long-term rent pressure high, keeping many landlords onboard, even when controls have been introduced to suppress rents. Rent controls (from historical data) appear to work in the short-term, but long-term the market has always reached its own equilibrium.  

Build-to-rent is on the rise but is still very small compared to the millions of small-scale landlords. Their advantage is that these institutions can manage compliance more cheaply by operating at scale, and they have access to cheaper finance, but even they have been influenced negatively by some policy decisions. Build-to-Rent is receiving government encouragement and will fill some of the gaps, but only in profitable popular urban centres. Rural and suburban markets are unlikely to be saved by BTR developers.

Political cycles and enforcement

Regulation without enforcement is pure symbolism; regulation with enforcement is potentially transformative. England currently lacks the resources to enforce properly. Scotland and Ireland enforce more actively but still face their own capacity constraints. Whichever government invests in enforcement will radically alter the future of private renting. 

Three Likely Scenarios suggested by Dr Watson:

The first scenario and probably the most likely is “managed consolidation”.  Scotland continues shrinking landlord numbers by a few percentage points each year. England follows the same path but with a time lag as the Renters’ Rights Act beds in. Ireland, already deep into interventionism, sees landlords slowly exiting unless incentives emerge.

Build-to-Rent expands, but nowhere near fast enough to replace lost rental housing stock. The result across the piece is constrained supply, upward rent pressure where controls permit, and a PRS dominated by medium-to-large operators.

Scenario two is a regime of policy-driven stabilisation which is always possible. This requires the government to act decisively with practical incentives for retrofitting, targeted tax breaks, enforcement funding and licensing simplification.

If governments can move towards supporting rather than simply regulating, most small landlords could stabilise and the PRS retain its diversity. This is politically plausible but financially expensive. No administration has yet shown an appetite to progress this.

Scenario three would be rapid Institutionalisation, build-to-rent on steroids.  If regulation remains heavy and enforcements expand, without parallel support measures, small landlord exits will accelerate. A 15–20 per cent reduction in private landlords over a decade is not unrealistic.

In this scenario therefore, BTR expands but cannot plug regional gaps, rent controls suppress headline growth but don’t help with shortages and governments resort to emergency measures (rent freezes, tax penalties, mandatory registration). This is the Irish trajectory writ large.

Will Scotland and England diverge?

Scotland is already a highly controlled, tightly regulated market. It will likely see further gradual decline in small landlords unless policy support offsets the friction. Watson’s projection suggests a long-term hollowing out unless incentives materialise.

England is just at the beginning of a heavy tenancy reform programme. The Renters’ Rights Act will reshape the market, but the lack of enforcement capacity may create a two-tier system with highly compliant landlords in some councils, and a “regulation-lite” culture in others. England’s scale will slow the consolidation effect but does not prevent it.

In the Irish Republic we have the clearest example of government intervention without an increase in supply. Strong rent rules create predictability for tenants but suppress investor appetite. Unless new builds can accelerate dramatically, Ireland will likely experience the most acute landlord exit over the next decade.

What can landlords do next? 

They can scale up — one-property landlords increasingly sell whereas three-to-ten property landlords are expanding. Landlords can incorporate. Company structures spread compliance costs and broaden financing options and have tax advantages for larger operators.

Landlords can switch tenure models such as a shift to short-term and holiday letting, singles lets to HMOs where regulation allows. Landlords should invest in compliance with digital record-keeping, documented management processes, and legally robust tenancy agreements become standard.

The drastic alternative is to exit the PRS market entirely and this will happen particularly among older landlords nearing retirement and facing major retrofit costs.

In summary

Dr Watson’s research makes the PRS trajectory common to all these nations very clear: regulation is fundamentally reshaping the PRS and will continue along the current path unless there’s a sudden change of policy direction – unlikely. 

Scotland and Ireland have shown what happens when change is quick and cumulative; Wales and England are following, though not identically. Unless governments rebalance rights with support, small landlords will carry on leaving the sector. 

The private rented sector will consolidate into a narrower, more professionalised market, something the UK government will probably favour, but it won’t be the whole solution to an existential housing crisis. The next thirty years are already in train; the question is, will each jurisdiction continue to travel down the same path.

Here’s a Renter’s Rights checklist for English landlords over the next five years:

Tenancy and legal changes

Are you fully aware of the new Renters’ Rights Act requirements?

Will your tenancy agreements comply with new statutory requirements?

Will you apply updated rent-increase procedures correctly, prescribed forms and notice periods etc?

Will you document every communication and procedural step — evidence will be vital in possession cases?

Possession and notices

Will you pay more attention to tenant selection in future?

Can you align notice periods with new legal frameworks?

Can you keep a compliance log for every tenancy to avoid technical breaches?

Will you be preparing alternative strategies where possession routes become slower or more conditional?

Property Standards & Retrofit

Will you create a schedule or plan for energy efficiency upgrades (EPC pathway)?

Can you maintain digital records of all inspections, repairs, safety checks and invoices?

Can you schedule and log annual compliance events (electrical, gas, alarms, legionella assessment)?

Licensing & registration

Are you aware of the coming landlord register and can you renew with the correct landlord register or licensing authority?

Do you always verify agent licensing or registration where required?

Will you maintain a compliance calendar for renewal dates?

Financial & tax preparation

Do you stress-test your cash flow for higher rates and potential further tax adjustments using a cash flow forecast spreadsheet?

Have you considered incorporation or restructuring for tax efficiency? Speak to your tax advisor.

Can you maintain a sinking fund for future regulatory upgrades?

Portfolio strategy

You must decide whether to scale up, partner, incorporate or exit.

You should monitor local enforcement activity — councils vary dramatically.

Be aware of Build-to-Rent competition and local planning trends.

[Main image credit: Rino Adamo]