A lawyer and estate has urged the Scottish government to ‘reset’ its relationship with the landlord sector in its 19 December Budget, by scrapping rent caps.

Andrew Diamond, partner and head of residential property at Edinburgh-based solicitor and estate agency firm Lindsays, said the current political hostility is squeezing supply north of the border, pushing up rents.

Scottish landlords are currently limited to raise rents by 3% per year, which is causing some investors to leave the sector, and prompting landlords that remain to charge more for new tenancies – to compensate for how they won’t be able to increase rents in line with the rest of the market in future.

Diamond said: “More and more sellers are coming to us with properties they previously rented out because they do not see a future in which they can operate viably and fairly in the current climate. I cannot remember the last time I had a purchaser knocking on my door who was buying to let. The vast majority of our dealings with landlords at the moment are disposals or remortgaging.

“I have no doubt that government policy is designed to help tenants, but the clear unintended consequence is that the opposite is true. The size of our rental market is shrinking because institutional investors are taking their business elsewhere, and current landlords are coming to us to sell their properties. This decreasing supply is propelling rent prices. It makes neither social or financial sense to keep digging a hole here.”

The Budget, announced by Scotland’s finance secretary Shona Robison, will set the tax and spending plans for Scotland for 2024-25.