Single family housing - here to stay?

The Scottish National Investment Bank has just announced that it will be investing in single family build-to-rent homes at Little France in Edinburgh through a £19.5 million equity investment to a partnership with Hunter REIM and Ediston Real Estate. This is another example of the slow but steady growth of the Single Family Housing (SFH) sector in Scotland, but what is the future for SFH in Scotland?

The SFH Conference, held in London earlier this summer, brought together institutional investors, major housebuilders, specialist operators and funders to hear about the SFH sector from different perspectives. The conference focused mainly on the position in England but also highlighted the opportunities and obstacles ahead which may apply both north and south of the border.

The investment angle

Institutional appetite for SFH remains robust despite headwinds from elevated interest rates, build cost inflation, and geopolitical uncertainty. Knight Frank research has highlighted that 55% of all build-to-rent (BTR) investment in 2025 was directed towards SFH, and SFH is the only BTR sub-sector in which yields are not moving out.

The investment case is underpinned by strong demand dynamics: rental growth is baked in, undersupply makes the asset class attractive to long-term holders, and SFH tenants stay an average of 4.7 years. This is significantly longer than in multi-family housing, resulting in lower void rates and reduced operational expenditure. Investors such as Aberdeen, PGIM, and Packaged Living confirmed that they remain active buyers.

The regulatory angle

The Renters' Rights Act was addressed with measured pragmatism. Enhanced security of tenure is broadly compatible with SFH operating models, given that SFH tenants already trend toward staying longer. However, uncertainties remain around obtaining vacant possession to do refurbishment works and there are concerns around the rent review mechanism, with tenants' ability to challenge reviews potentially resulting in procedural delays.

SFH is well positioned when it comes to sustainability. Newer housing stock generally meets higher environmental standards, and many SFH investors are already seeking a minimum EPC rating of B. As regulatory requirements tighten, the exit of buy-to-let landlords unable to meet higher sustainability standards will further increase demand for institutionally delivered, sustainable rental homes.

The housebuilders' angle

With interest rates remaining higher than anticipated and the build-to-sell market under pressure, bulk sales to SFH operators have been a valuable revenue source for housebuilders, in some cases bringing output up to expected averages where it would otherwise have fallen short.

Knight Frank has recently reported that SFH now represents around a quarter of the BTR development pipeline, reflecting its growing role within the sector. The true number may of course be higher, as some bulk sales of SFH are driven by poor performing sales markets when investors (who have no desire to be involved at the development stage) swoop in to save the day.

A key question is whether housebuilders will sustain commitment to SFH once the build-to-sell market recovers. Whilst certain major players — notably Persimmon and Vistry — are embedding SFH into their long-term strategies regardless of market conditions, others may inevitably revert to the higher returns from open market sales. For those housebuilders willing to commit to SFH now, there is currently a strategic opportunity to establish a lasting role in the sector's supply chain.

The Scottish angle

Whilst the conference mainly focused on the activity in England, the SFH opportunity north of the border is distinct, growing, and in many respects more favourable than in England.

The demand: Scotland's housing shortage is acute. In the year to September 2025, there were 18,347 new-build completions, which is an 8% fall year-on-year, and new-build starts were down 5%. The number of homes granted full planning consent in 2025 has more than halved since 2020, with completions across all tenures falling 13% last year to the second lowest total since 2016.

The locations: Provided suitable land can be acquired, Scotland's central belt — Glasgow, Edinburgh, and surrounding commuter corridors — presents the most compelling opportunities for SFH. Both cities benefit from major employer anchors in financial services, technology, higher education and the public sector, providing the wage growth essential to sustaining rental demand. Aberdeen offers scope for value-oriented investors taking a longer-term view.

The taxes: The continued availability of Multiple Dwellings Relief (MDR) in Scotland (no longer available in England) can improve scheme viability.

The tenancies: The private residential tenancy (PRT), introduced in Scotland in 2017, provides open-ended security of tenure, with tenants only removable on specified statutory grounds. For institutional SFH operators, the PRT is well understood and largely compatible with their business model.

The rents: Scotland's annual rent inflation has been slowing since the record high of 11.7% in August 2023. This is partly attributable to temporary rent controls which were in place from September 2022 to March 2025. For SFH investors, this suppressed base represents both a challenge (current yield compression) and an opportunity as rents normalise in a market which is structurally short of quality family homes.

Under the Housing (Scotland) Act 2025, local authorities may apply to designate rent control areas, within which in-tenancy rent increases would be capped at CPI plus 1% (subject to a maximum of 6%), with similar caps between tenancies where the same landlord has let the property within the previous 12 months. Local authorities must first report on rent conditions, which must be done by May 2027, meaning rent controls will not apply anywhere in Scotland until summer 2027 at the earliest. Critically, the Scottish Government has confirmed that build-to-rent and mid-market rental properties, including residential developments with six or more properties built and operated for rent, will be exempted from rent controls. This is expected to attract greater investment to Scotland.

The outlook for SFH

The key challenges for SFH, which apply equally north and south of the border, are build cost inflation and lack of availability of suitable pipeline, but the supply and demand imbalance provides a powerful structural underpinning. Demand is growing and will continue to do so. The current pace of BTR delivery cannot plug the housing supply gap. Investors remain committed and are actively acquiring, even if yields have not yet reached optimal levels.

As mortgage costs rise and capital gains on homeownership weaken, renting is increasingly seen as a rational choice, particularly among younger generations for whom subscription-style living is the norm. The gap left by departing buy-to-let landlords presents a structural opportunity for institutional SFH providers to deliver a professionally managed, high-quality alternative.

Scotland, with its policy clarity on BTR, its retained tax advantages and its acute housing shortage, stands out as a market where the opportunity is perhaps most ripe. The sector that can deliver at scale and at pace, on both sides of the border, will define the next chapter of UK residential investment.

To sum up

The message from the conference was clear: SFH is no longer a niche market within the build-to-rent sector. It is an established and growing component of the UK's housing landscape. The message has clearly landed with the likes of Fiera and Packaged Living. Fiera Real Estate UK and Packaged Living have launched a single-family fund, with ambitions to grow a £1bn portfolio and CBRE IM recently completed its first purchase in the £2bn SFH strategy which it launched earlier this year with Moda Living.

As one panellist succinctly put it: SFH is here to stay.