Central belt of Scotland sees rental values soar

Average residential rents in Scotland increased by 2.4% in the year to September led by strong growth in the country’s central belt, the latest index figures show.

Rents in the private rented sector reached an average of £755 per month but there is considerable variations. In Edinburgh, for example, the average rent surpassed £1,000 a month, up 7.56% year on year, the CityLets report shows.

Rental growth was also strong on Glasgow, up 7.2% year on year and in West Lothian with an annual rise of 5%.

The index report says that it is notable that 41% of 16 to 34 year olds now rent privately and is the dominant tenure for that age group, overtaking owner occupation in 2012 and, on current evidence, on course to reach 50% by 2020.

In Aberdeen, where the market has been hit by the fall in oil prices, the sector has seen the decline of rental prices slow to 16.7% below September 2015, less than the 20% recorded in the first two quarters of the year.

The report also shows how the rental sector is increasing in Scotland and now makes up 14% of all households at 350,000, up threefold since the CityLets index began in 1999. Some 61% of all properties let within a month and with an average time to let of 30 days. The average rent in Aberdeen is now £829 per month, down 25% from a peak of £1,110 recorded less in the fourth quarter of 2014.

The report warns that tenants in Edinburgh may find it increasingly hard to secure a rental in the capital due to the speed of letting for popular one and two bedroom properties, at 14 and 20 days respectively. These average time to let usually cover the period for viewings, deposit collation and the obtaining of references.

And it explains that the Glasgow rental market is now on a similar trajectory to Edinburgh with the third quarter of 2016 recording the city’s steepest annual rise in 10 years of Citylets reporting. Dundee saw rents rise by 2.8% with averages now at £590 per month and with strong growth recorded for one bedroom properties at 7.2%.

Meanwhile, rents in West Lothian have continued their upward trajectory, recording 5% growth in a quickening market where properties rent eight days faster than last year at 32 days.

According to Nicky Lloyd of ESPC Lettings the third quarter of 2016 has seen the demand for rental properties dramatically exceed the supply. ‘Fierce competition from tenants has led to an increase in rents and decrease in total time to let, all of which is positive news for landlords. This trend looks to continue and we anticipate another strong quarter in the rental market,’ she said.

It has also been a busy quarter for the market in Aberdeen, according to Matt Pullinger of letting agent Northwood. ‘We have seen a slight stabilisation in the market in terms of rental price. In most cases significant decreases were experienced by landlords in the first two quarters but we are now seeing this level out,’ he explained.

‘Rental prices are now in line with other cities as well as being more favourable for tenants who were previously priced out of the market. It is very encouraging to see that time to let has improved with properties moving quicker than before over the busy summer months,’ he added.

Ian Lawson, manging director of Braemore Sales and Lettings, believes that investor activity and confidence in Scotland’s property market remains high. ‘The combination of high rental values, prospects for rental income growth, in addition to capital appreciation further fuelled by the significant housing shortage, makes a compelling argument for investors to remain in the buy to let arena,’ he said.

‘Any post-Brexit temptation amongst landlords to exit the property market would be entirely misplaced, with the Scottish cities demonstrating sound resilience and growth, market indicators on rents and sales showing huge promise for the period ahead,’ he added.