Private sector rents in Scotland increased by almost 5% in the 12 months to February 2017, taking the typical rent to £575 per month, the latest index from Your Move has shown.
Overall rents were up by 4.9% but the buy-to-let index suggests that demand is falling and this has resulted in rents falling in some locations such as Glasgow and Clyde and Highlands and Islands.
The overall rent rate was also down by 0.1% month-on-month. While in Highlands and Island rents are down 3.3% year on year and the report also suggests that demand in this area has also been affected by the Scottish government’s Low Cost Initiative for first-time buyers which promotes 0% deposit mortgages and has helped more people move from being renters to home owners.
The East of Scotland remained the cheapest place to rent with an average of £535 a month but this is 2.3% higher than February 2016 while the strongest performance was in the South of Scotland where rents increased by 4.2% year on year to £560.
However, the report explains that while rents in this region still increased, all areas of Scotland have been impacted by the trend for European Union migrants, particularly from Poland, to leave the country and seek employment elsewhere.
But yields levels remain solid and landlords and property investors continued to see strong returns from the Scottish rental market in February with the average yield at 4.9%, unchanged month on month and year on year.
This yield also compares strongly to property investment in other parts of the UK. Landlords in Scotland continue to see much better returns than the average investor in England and Wales, where the average yield in February stood at 4.1%. Only landlords in the North East and North West regions of England enjoyed better returns at 5.3% and 5% respectively.
“The Scottish rental market continues to grow as a whole, despite variations on a regional basis. In February we have continued to see demand reduce in several areas, particularly those with high numbers of migrants from European Union countries,” said Brian Moran, lettings director of Your Move Scotland.
“Government schemes have also had an impact on the rental market with more people being able to purchase their first home and leave the rental arena. For landlords and investors yields have remained strong, particularly when compared to the returns on property in England and Wales,” he added.