Plans to introduce rent controls in Scotland could hit buy-to-let investment north of the border.
No-fault evictions may also be banned in a shake-up of the country’s private rented sector.
The proposals have been made in the Scottish National Party’s programme for government, released by First Minister Nicola Sturgeon.
But property experts have warned the plans could backfire and hit investment in the rental market.
The SNP’s programme contains a Private Tenancies Bill which includes measures to make rents more predictable and protect tenants against in excessive increases.
And it may also introduce rent controls for “rent pressure areas”.
The Bill will also “remove the ‘no-fault’ ground for repossession, meaning a landlord can no longer ask a tenant to leave simply because the fixed-term has ended.
The Scottish Property Federation (SPF) warned that rent controls could deter investment in Scotland’s private rented sector and curtail much-needed housing supply.
It said that even the possibility of rent controls could sound the death knell for future investment.
David Melhuish, director of the Scottish Property Federation, said: “A clear message we have had from the industry, however, is that the mere prospect of rent controls, could be enough to spook potential investors bring us back to square one again.
“If the Scottish Government wants to increase housing supply, then the introduction of rent controls is not the way to do it.
“The purpose-built private rented sector has the potential to deliver a large amount of new homes across Scotland, and we should be doing everything we can to encourage investment in this sector rather than regulate this sector before it has had chance to take root.”
