Supply constraints continue to exert upward pressure on Scottish rents

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.

The latest Citylets Report on Scottish rental figures for Q1 2018 records a rise in the Scottish national average to £780 per month, up 1.6% Year on Year (YOY), as concerns about supply in urban locations continues to bite.

Seasonal demand for larger 4 bed properties also impacted lifting the national average into positive growth for the first time in 3 quarters. Rents in Scotland have risen 3.1% on average over the last 5 years and 2.1% over ten years.

[adbutler zone_id=’297765′]

Commentating on the latest report, MD of Citylets Thomas Ashdown said, “Supply in Scotland’s largest cities is pushing rental prices steadily upwards. Whilst the rate of annual growth has slowed in both Edinburgh and Glasgow, they have been rising every quarter for the last 7 years in Glasgow and 8 in Edinburgh. 2018 will be a telling year with tax changes and the increasing popularity of short term holiday sites likely to put further pressure on supply.”

Edinburgh

Supply of rental property, in terms of the number of properties available to rent, has been steadily reducing since its peak in 2013. Nowhere has this been more keenly felt than in Edinburgh where annual rents have been increasing, as measured quarterly, for 8 full years. However whilst the 5 year average rise of 6% will be concerning for tenants, the ten year view of 4.2% is broadly in line with the CPI+1+N proposals for rent caps in any designated rent pressure zone. In other words, the current form of rent cap would offer the highest going rate in the open market in any of Scotland’s cities on the long term view. Rents in Edinburgh are currently at an all time high of £1062 on average, up 3.8% on last year. 1-4 bed properties all posted positive growth of between 3 and 6 % YOY with 3 and 4 beds letting quickest bucking the normal trends and reflecting the very strong demand from students in the capital.

Glasgow

Rents in Glasgow have also been increasing steadily, not as sharply as in Edinburgh but for nearly the same amount of time- 28 consecutive quarters, 7 years. Q1 2018 records a 1.2% YOY rise to £749 on average, overtaking Aberdeen, but growth has slowed remaining in the 1-2% range down from both the 5 year average of 4.4% and the 10 year average of 3.2%. The average property in Glasgow takes 1 month to rent, up 1 day on Q1 2017. Larger 4 bed properties saw the steepest rise in Q1 2018 up 7.3% YOY to £1600.

Aberdeen

Rents in Aberdeen fell below national average for the first time this quarter however this is not likely to unduly unnerve investors as the trend towards levelling off continues. The average rental property in Aberdeen costs £736 per month, down 4.2% YOY. As with Scotland’s other large cities, 4 bed properties fared best recording positive growth, albeit slight at 0.3%. The average property in the granite city takes almost 2 months to let at 58 days. The 5 year picture for Aberdeen is down 23.4% but the 10 year view is less at minus 16.8%.

Dundee/West Lothian/South Lanarkshire/Renfrewshire

Dundee also returned to positive growth in Q1 2018, up 0.7% YOY, but driven by strong gains in the main 1 and 2 bed markets- up 5.6% and 2.5% respectively. The average property in Dundee rents at £614 per month and takes 46 days to let. Rents in West Lothian also posted sharp annual growth, up 4.6% YOY, with all 1-4 bed markets recording sharp rises. 1 bed properties in South Lanarkshire recorded 3.8% growth leading the region to a 0.7% annual rise.

Commenting on the Scottish Market, Adrian Sangster of Aberdein Considine, said: “We believe we are seeing the first signs of a slowdown in the BTL market as tax changes from both Holyrood and Westminster begin to bite. The LBTT surcharge of 3%, which was designed to help first-time buyers by discouraging the competition of second home purchasers, does not appear to be having the desired effect. Recent research shows house purchase prices actually increased in 26 out of the 32 local authority areas. So whilst prices continue to increase it appears the supply of rented properties is falling.”

Share

Related News