Professional vs Individual: Does the Scottish Government Favour Corporate Landlords?

Do governments, both UK and Scottish, prefer the idea of large, corporate landlords as opposed to smaller landlords? If they do, is there evidence that legislation is skewed to benefit larger landlords at the expense of individuals?

It’s an interesting question and one which has roots going back many years. Some recent legislation here in Scotland suggests that corporate landlords may be getting more favourable treatment.

It’s not a case of straightforward discrimination though, so as property professionals with many years of experience across the sector, we’re going to look at how legislation and regulation can favour some at the expense of many.

So, does the Scottish Government favour corporate landlords over individual providers?

When is discrimination… something else?

If you’re looking for bias in legislation you won’t necessarily find huge red flags planted in every clause. Nor will you see the building blocks of a juicy internet conspiracy theory.

If discrimination, or favouritism, exists, you’ll see it in other, more subtle ways. Requirements which are more onerous for smaller landlords, costs that cut deeper for those who already earn less.

There are exceptions, and we’ll look at those, but more often than not what you’ll find are rules which apply equally to all the players within the PRS, but whose effects are markedly more demanding to particular landlords.

This is still peculiar however. The vast majority of landlords are properly described as small landlords, statistically owning 1.5 properties. In 2025, the Scottish Government reported that 71% or registered landlords owned just one property.

Other surveys done over the years show varying numbers, but the underlying fact, that the vast majority of landlords own very small portfolios, remains. Why then do politicians seem to favour larger, corporate landlords?

It’s important before we go further to point out that lacking a smoking gun, we can only look at the pressure regulation puts on landlords and imply that there is any favouritism at work. We’re sure ministers would deny any such intention…

Build-to-rent and Rent Control Zones

The Scottish Government, after passing the Housing (Scotland) Act 2025, issued a further regulation; “The Private Housing Rent Control (Exempt Property) (Scotland) Regulations 2026” in the form of a draft Statutory Instrument.

The reason stated for the exemption, much celebrated by property developers, is that the threat of rent control stifled development, resulting in fewer new homes for rent being built.

Private landlords get no such government encouragement to either increase their portfolio or to improve the standard of existing stock.

Moreover, since BtR numbers should be included in the overall totals of new builds in Scotland, numbers which are still inadequate compared to the need, a cynic might enquire as to what exactly the BtR companies are adding to the PRS.

As we examined in ‘The Effect of New Builds on the PRS’, the actual number of properties of all types being started and completed is well short of what’s required.

Now there may be many reasons for that, but there is no obvious reason to suspect that a lack of BtR activity is the main problem, but it may offer a clue to the Government’s motivation to aid the sector.

One has to assume a political dimension to the decision to exempt BtR from any future rent control action, given that these developments are often backed by large companies or financial institutions.

Just one example of this is the burgeoning portfolio owned by Lloyds Banking Group under the aegis of their subsidiary, Lloyds Living. They currently own some 7,000 properties and aim to add 43,000 more by 2030.

That gives them, and others like them, considerably clout, something that has been noted by private landlords. However, access alone may not explain their preferential treatment.

It’s much more likely that in a time of housing crisis, the Government prioritises building of new homes above all else, and that is something that few existing landlords can ever hope to do?

The Scottish Government doesn’t build homes itself, so it does what governments of all stripes do; uses what power and influence it does have to encourage those who can, to do so.

The resulting inequality is, from a governmental perspective, unfortunate, but a price worth paying.

Other areas of disparity

Other examples of discrimination or favouritism are less explicit. The PRS has seen considerable legislation and regulation, again this is something we covered in March last year in ‘Response to Buy-To-Let Legislation…’

Our conclusion, that landlords will largely bend rather than break in the face of new legislation, is one we stand by, however there is no doubt that for private landlords, all of this is an additional burden on them, no matter how well-intentioned.

Larger landlords, while they face the same issues, generally have greater resources to help deal with such changes; they’re likely to have staff on hand to ensure compliance, or possibly outsource much of  this work to agencies.

Economies of scale also work in their favour – more properties mean more income which gives them greater leeway when it comes to coping with costs arising from new regulation.

Private landlords have fewer options when it comes to offsetting additional costs.

One good example of this is rather old, to wit; Section 24. In short this provision affected the way profits derived from property income were calculated and taxed which could result in basic rate taxpayers finding themselves in a higher bracket.

This was most likely to affect landlords who paid tax at the basic rate and who were also in employment. There were ways to legitimately offset this tax burden, but they were limited.

In the 2025 budget, the current government set new tax rates on income from property of 22% for basic rate tax payers, and 42% for higher rate. This increase was allied to a tax-free allowance on income from property of just £1,000.

One way to avoid these tax burdens is to operate as a limited company, since the company gets taxed on its profits, not the individual. However this comes with its own complications and costs, and doesn’t suit all landlords.

Bigger landlords, with more extensive portfolios, were far more likely to already be incorporated and therefore were unaffected by these changes.

Advice from the property pros

The PRS finds itself in a peculiar situation; the landlords who still provide the vast majority of rented accommodation are the very definition of small businesses, usually owning one, maybe two, properties.

The Scottish Government is well aware of this – it has access to the landlord registration data after all.

Moreover, the percentage of tenanted properties being sold back into the PRS has nearly doubled in the past year, with 17% of properties sold by landlords still being available to those looking to rent.

However, when concessions are made to the PRS, they do seem to benefit larger, corporate landlords. For instance, Additional Dwelling Supplement (ADS) can be avoided if you can afford to buy 6 or more properties at once.

The basic rate of Corporation tax is currently 19% on profits up to £50,000. The Starter rate of income tax in Scotland is also 19%, but rises notably depending on income – see our comments on Section 24.

Simply setting up a limited company is not some magic panacea for small landlords.

Now, we fully accept that some of these disparities are the result of years of tax policy, both in Scotland and the broader United Kingdom, but that does not change the fact that the majority of Scotland’s landlords feel put upon by the government.

And while individual landlords feeling picked on is not unheard of, that doesn’t mean that they are complaining without good cause.

Could it be that, despite overwhelming numbers, landlords are just badly represented? We ask this without any malice, the Scottish Association of Landlords  does sterling work, but can only speak for those willing to be represented.

Does the government in Scotland, like a sizeable proportion of the populace, simply not understand the importance of individual landlords and the collective contribution they make? Do they simply take small landlords for granted?

While there may be some truth in all these points, the likelihood is that preference is being shown to companies who are promising to build hundreds of new homes at a time.

In summary…

Does the Scottish Government favour corporate landlords? Possibly.

Lobbying and representation may well play a part in this – large corporations are experienced in approaching governments to get what they want. Mr. Johnson, landlord from Ayr, with one buy-to-let property is rather less experienced in this.

That will be true for many, many individual landlords, and even if they could get the ear of government, could they offer what the corporations can? Promises of large building projects with new infrastructure are beyond small landlords.

Even when they act collectively, they may struggle to be heard in a world where governments generally are struggling to cope with a shortage of housing. Small landlords are already doing their bit – maybe they’re just taken for granted?

All of this notwithstanding, individual landlords continue to play a massive role in housing people in Scotland, and for those involved, there are still good returns to be made.

The nature of the sector may be slowly changing, but there are still many opportunities for those willing to take the plunge. If you’d like to know more about the PRS and whether it’s right for you, get in touch – we’re always happy to chat.

Thanks as always for reading this far, hopefully you found our musings interesting.

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]