Rents increasing in Scotland with Edinburgh seeing 6.1% rise year on year
Average rents increased by 0.3% month on month in October and are now 0.4% higher than a year ago, taking the average monthly rent to £558 per month, the latest buy to let index shows.
But the national figure hides some red hot markets including Edinburgh and the Lothians where rents are some 6.1% higher than October 2015 and even although yields have fallen they are still higher than in England and Wales.
Overall the buy to let index from Your Move says that rental properties in Scotland continued to outperform expectations despite uncertainty in both the UK and the wider global economy.
The index report also shows that tenant arrears have improved dramatically this autumn. In October 7.9% of all tenancies had arrears of a day or more which is much lower than the 12.5% figure recorded last month, reflecting the improved state of Scottish tenants’ finances.
October’s figure is also much lower than the same point in 2015, when arrears represented 13.8% of all tenancies.
‘Landlords have been thrilled with the performance of Scottish rental properties in recent months, and October again showed how strong this market is,’ said Brian Moran, lettings director for Your Move in Scotland.
‘The big news too is the improvement in tenant finances, meaning that fewer landlords are facing problems with late and non-payment of rent and, in terms of regional results, there has been excellent performance of the Edinburgh and Lothians region shows that London is not the only UK capital city with a booming property market,’ he added.
The Edinburgh and Lothians region has had the highest rents in Scotland for many year and in October it saw rents rise faster than any other part of the country. Prices in the capital city and surrounding area leapt by 6.1% in the last 12 months and were also up 0.9% compared to September. The average rent in this region now stands at £645 per month.
It was a mixed picture elsewhere in Scotland. Landlords with properties in the Highlands and Islands continued to enjoy higher than average rents, even though prices have fallen by 8.1% in the last 12 months. The typical property in this area now lets for £576 per month.
Glasgow and Clyde was close behind with average rents of £573 a month but this was down 1% year on year and by 0.2% month on month.
The East of Scotland remains the cheapest place to rent a property, although this region was one of only two areas to see prices grow compared to both last year and last month. The average rent of £528 in October was 0.4% higher than last year and 0.1% up compared to September.
Yields may have ticked down between September and October, but still remain highly competitive when compared to both property investment in other parts of the UK and Scottish yields in previous years, the report also shows.
Rental properties in Scotland typically returned 5% in October 2016, down on the 5.8% recorded in September but still well above the 4% seen a year ago. Landlords in Scotland continue to see much better returns than their counterparts in England and Wales, where the average yield in October stood at 4.7%. Only properties in the North East and North West regions of England saw better returns at 5.3% and 5.1% respectively.
Moran explained that despite the fall in yields in Scotland, landlords will be boosted by strong rents in most areas and a fall in the level of arrears across the country.