Scottish private rented sector pushes on to record high

Amidst all the changes in the Scottish PRS, the latest Citylets report records very much business as usual as regards rent levels with all major markets operating broadly to trend.

Gillian Semmler, communications manager at Citylets, said: “There has been a lot of regulatory and tax change in the Scottish PRS of late such as the introduction of the new PRT and now Registration of Letting Agents, however the markets continue to chart broadly the same course. The annual growth rate in Edinburgh has returned to the circa 5 per cent levels seen in recent years but Glasgow continues to edge upwards at just over 1 per cent. Demand for larger properties remains high in many urban areas resulting in above average rises.”

Rents in Edinburgh reached another high this quarter, up 4.8 per cent year on year (YOY) to £1087 per month and represents a spike in annual growth from the more sanguine levels of circa 3 per cent seen over the last year. It is likely further highs will be reported at Q3 2018 as we enter peak season given rents have risen 9 times out of the last 10 between spring and summer periods.

Securing a rental in Edinburgh remains competitive with the market ticking along at pace with an average Time To Let (TTL) of 26 days, just 1 day more than Q2 2017.

All main Edinburgh markets posted strong increases in Q2 2018 on the previous year with 4 bed properties outperforming the city averages rising a significant 6.8 per cent YOY and taking just 20 days to let, down 5 on last year.

The Glasgow rental market continues to operate to a steady trajectory with both average rents and TTLs almost unchanged on last year.

The average property in Glasgow now rents at £763 per month, up just 1.1 per cent YOY, and takes 27 days to let. Overall the PRS in Scotland’s largest city appears well balanced however 1 bed properties recorded significant annual gains at 4.5 per cent.

The continued rise of Glasgow, albeit slight, coupled with Aberdeen’s continued falls has resulted in a clear gap opening up (£23) between the two cities having surpassed the granite city average for the first time last quarter.

Rents in Aberdeen continued to fall in Q2 2018 to average £740, down 6.1 per cent on Q2 2017 and broadly in line with trend over the past 18 months. Investors may have hoped for a leveling off on rents which remains illusive however it is noteworthy that 1 bed properties posted falls of just 2.7 per cent YOY with a TTL 4 days faster at 48 days. Property to rent in Aberdeen is now £59 per month below the national average which was boosted by above trend rises in Edinburgh in particular.

Other major urban areas around Scotland also posted positive annual growth of between 2 per cent and 4 per cent.

Dundee saw rises for all property types (1-4 beds) with the city average up 2.5 per cent on last year to stand at £618 per month. 1 bed properties outperformed the rest of the local market up 4.9 per cent YOY and recording the fastest TTL at 44 days, an improvement of 4 days on Q2 2017. West Lothian averaged a 4.1 per cent rise and there were also increases for South Lanarkshire (3.8 per cent) and Renfrewshire (2.1 per cent) where 4 bed properties recorded double digit gains at 14 per cent and 11.3 per cent respectively.

Ian Lawson of Lomond Capital, said: “Strong sustained demand for accommodation in Edinburgh and Glasgow continues to show through, with market conditions and overall mechanics of PRS largely running as normal despite the changes to PRT and still to arrive RPZ’s. Demand in the 1-2 bed markets from an investment point of view is busy and continues to offer new investors a route in. Slow and steady in the other regions with some notable uplifts; Aberdeen is still attempting to claw its way back despite solid let numbers, and we expect to see more prominent rent shifts by the end of 2018.”