Build-to-rent specialist Get Living is pausing work on a £200m development in Glasgow city centre over concerns the project is no longer financially viable.
The development would have seen the creation of 1,500 homes on the site of the former College Street Goods Yard on the city’s historic High Street, with just under half intended as student properties.
But Get Living said the Scottish Government’s rent control policy – under which rent increases are temporarily banned during tenancies in response to the cost-of-living crisis – combined with market conditions mean the future of the scheme is now in doubt.
“At Get Living, we are big advocates of Glasgow as a thriving commercial hub and we know that the high-quality rental homes that are crucial to driving wider growth and productivity in the region are in great demand,” a spokesperson said.
“This is what led us to our plans to create 1,500 homes on the former College Street Goods Yard site, of which 823 homes would be for rent, alongside 687 studios for students.
“However, the ongoing policy on rent controls in Scotland combined with current market challenges has resulted in a shift in investor support, meaning that the viability of this development is now uncertain.
“While it remains our ambition to be part of the solution to the city’s housing shortage, at present we are unable to proceed with the scheme against this background and we hope that the Scottish Government will reconsider its stance.”
Although rent controls seem like an attractive prescription for limiting rental levels, they have unintended consequences that exacerbate the underlying housing problems, the spokesperson added.
“By reducing investment in the rental market, such policies suffocate future supply, lower standards and risk creating an unregulated secondary market for sub-lets,” she said.
But the Scottish Government defended its rent cap, saying ministers were committed to ensuring the measure remained “proportionate and necessary”.
“We are in the midst of a cost-of-living crisis, and our emergency legislation has been protecting tenants from significant rent rises and risk of eviction,” a spokesperson said.
Initial rents for newly built rented homes are set by the market and so were not affected by the cap, they added. Safeguards had been built in for landlords, with “modest” rent rises allowed from April onwards.
“We are also suspending the rent cap for student accommodation from 30 March, recognising its limited impact on annual rents set on the basis of an academic year,” he said.
Last month, leading Scottish homebuilder Springfield announced a dip in profit and said it would stop taking on long-term affordable housing contracts until market conditions improved.
The company also withdrew plans to expand its activity in the private rented sector following the government’s intervention in rent control.
Get Living’s £2bn portfolio includes 3,000 homes for rent across three neighbourhoods – East Village and Elephant Central in London, and New Maker Yards at Middlewood Locks, Manchester.