Rental sector is working well a year on from cap's removal

The system has now stabilised after a few years of issuess caused by interference in the market, writes David J Alexander.

The latest official quarterly rent figures for the Private Rented Sector (PRS) in Scotland reveal a system that is functioning well and has stabilised after a few years of inconsistency largely brought about by interference in the market.

When the Scottish government introduced a rent freeze in September 2022 it set in motion a series of responses which resulted in rents increasing at a faster and greater rate than they have ever historically risen.

The initial rent freeze only lasted from October 2022 to March 2023, when a 3 per cent cap was introduced with some exceptions allowing 6 per cent rises. This ran for a further year when a tapering system was introduced prior to the removal of the rent cap at the end of March 2025.

During this period demand soared, rents rose (the cap only applied to existing rental agreements so new tenants faced higher rents) and the market overheated. It is only since the end of rent controls that the market has stabilised, prices have levelled, and we are once again experiencing annual increases in line with historic trends.

The most recent monthly statistics show that average rents across Scotland rose by £21 to reach £1,022 per month, which was an annual increase of 2.4 per cent between March 2025 and February 2026 at a time when the inflation rate was 3.11 per cent.

These average rent figures continue the trend which began last year following the ending of rent controls and reveals how the private rented sector has stabilised in Scotland and is now producing rent rises broadly around the inflation level or just above.

There was considerable variation in increases across Scotland, with ten regions recording above-inflation rises while eight showed below-inflation levels.

West Lothian had the greatest increase of 9.8 per cent, increasing by £79 to £915 per month; all of the Ayrshire area recorded a rise of 6.3 per cent, going up by £35 to £657 per month, while Greater Glasgow rose by 5.6 per cent, increasing £59 a month to reach £1,275.

In Lothian there was an increase of 0.2 per cent, equating to a monthly rise of £4 to reach £1428; while in Fife, Dundee, and Angus there were falls of £3 and £10 to reach £810 and £831, respectively.

Lothian, Greater Glasgow, and East Dunbartonshire are the areas with the most expensive average rents of £1,428; £1,275; and £1,151 while Dumfries and Galloway, Ayrshire, and the Borders had the lowest average rents of £554; £657; and £706 respectively.

It will surprise no-one that the Central Belt has the highest average rents because these are the places where demand continues to exceed supply and the majority of people want to live, work, and enjoy the city lifestyle.

Overall, these figures are positive for both landlords and tenants as they show the market in equilibrium operating as it should with prices rising to meet demand and falling back when supply increases. Interfering in the market has caused distortions in recent years and it is to everybody’s benefit that the PRS is left to reach its own level which will produce a more balanced, steady period of prolonged growth in the coming years.