Scottish rental market grows but prices rise at slower rates

Michael Lloyd

March 26, 2018

While the Scottish rental market continues to grow, the speed in which prices are increasing has slowed down, the Your Move Scotland Rental Tracker found.

The average rental property increased in value by 0.7% in the 12 months to February 2018, reaching an average of £569 (seasonally adjusted).

However, this growth has slowed in recent months. On a non-seasonally adjusted basis, the average across Scotland was £568, up 1.4% on last month but down 1.2% year-on-year.

Brian Moran, lettings director, Your Move Scotland, said: “While growth has slowed compared to recent times, the Scottish market continues to grow at a healthy and steady pace.

“Yields remain strong compared to the average found in England and Wales, which will provide further encouragement to landlords looking to invest further.

“Encouragingly, tenant arrears have stabilised in recent months, meaning that landlords have more assurance over their investment.

“The outlook remains positive, although all landlords should check that their current letting agent is compliant with new rules from the Scottish government.”

The average Scottish rental property was let for £569 per calendar month during February, up 0.7% compared to the same point a year ago.

However the speed of growth has slowed in recent months and there are wide regional differences across the five Scottish areas surveyed.

Three areas saw rents increase in the last year, which were the Highlands & Islands, Edinburgh & Lothians and Glasgow & Clyde.

Prices in the Highlands & Islands region grew by 10% in the last year to reach an average of £644. The next fastest growth was seen in the Edinburgh & Lothians area, where the average price is now £666 following 2.5% growth in the last year.

Elsewhere, the Glasgow & Clyde region posted a 1.2% annual rise to hit £572 while prices in the East of Scotland fell by 0.2% to £534.

The biggest fall came in the South where prices dropped 2.3% year-on-year and the average property now costs £548 a month to rent. The East remains the cheapest place for tenants to rent a property in Scotland.

Your Move is once again alerting landlords in Scotland to new rules which affect the way letting agencies are able to conduct business on their behalf.

The Letting Agent Code of Practice was introduced on 31 January 2018 and all agencies are required to sign up to the new rules by 30 September 2018 if they wish to continue operating in the sector.

After this date it will be a criminal offence to conduct letting agency work if you aren’t on the register.

Those breaking the rules could face a fine of up to £50,000 and up to six months imprisonment. These rules are intended to increase professionalism in the sector and make sure that agents are properly able to handle money received from both tenants and landlords.

Landlords should check that their agency is registered and is compliant with these new rules.

Scottish yields continue to compare favourably. After a fall in January, yield levels stabilised during February and remain competitive compared to the returns found in England and Wales.

The average property in the country delivered a return of 4.7% to landlords, the same as last month but down on the yields recorded throughout 2017.

However, property investment in Scotland remains attractive when compared to the market in England and Wales. Across the two nations the average yield was 4.4% during February and on a regional basis only three areas boasted stronger returns.

Only landlords in the North East (5%), North West (4.9%) and Wales (4.8%) received better yields than the Scottish figure.

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