This compares with a 3.3% rise in England and Wales and month on month in Scotland average rents have stagnated at £548 and some areas, such as the Highlands and Glasgow have seen rents fall compared with January.
The figures from the latest buy to let index from lettings agent network Your Move also shows that while rental growth has seen a slowdown from 2.3% in the 12 months to January, it is an uptick from the 1.1% annual change recorded in February 2015.
According to Brian Moran, lettings director at Your Move Scotland, it is ironic that Scotland is witnessing one of the biggest government interventions into the private rented sector, at a time when rents have been moving at a much slower pace than in other parts of the UK.
But he pointed out that Scottish rents are still making incremental upwards progress but crucially, against a bedrock of stronger tenant finances. ‘Like in any market, affordability is a fundamental check on prices. Rental arrears are a great benchmark of affordability in the market, and their frequency is falling,’ he said.
However, he also pointed out that the passing of the Private Tenancies Bill last week signals a paradigm shift in the private rented sector in Scotland, introducing a new artificial influence in the market, aside from regional supply and demand.
‘Intervention in the market has had negative side effects in the past, noticeably the abolition of tenancy fees in 2012, and it will be interesting to see how landlords recuperate and recover from this regulatory blow,’ he explained.
‘Anything that makes buy to let investment slightly harder to swallow, and managing property portfolios more of a painful process for landlords, risks cutting off the inflow of investment. Tenants will ultimately be the ones who feel the effect on their bottom line, if the supply of properties to let dries up, Moran added.
A breakdown of the figures show that in the year to February 2016, three of five regions in Scotland have recorded positive annual growth in rents. Edinburgh and the Lothians is leading rent growth across Scotland, with the strongest year on year rise in rents, at a record speed of 7.7%. This is the fifth successive acceleration in annual rent growth and has taken average monthly rents in the region to a new peak of £644, up £46 from £598 in February 2015.
Rents in the South of Scotland are also now standing at a record high of £515 per month, up from £498 a year ago. This 5.3% annual rise is the second fastest increase recorded in the year to February. In the Highlands and Islands, rents are now 2.5% higher than a year ago, taking the typical monthly rent across the region to £554.
But in the East of Scotland, rents have fallen 2% year on year. This is the fourth month of negative annual growth in the region, taking average rents to £520 per month. Glasgow and Clyde have also seen rents fall compared to a year earlier. The average rent has dropped to £552, a 0.8% dip.
On a monthly basis the majority of regions have seen rents rise in February 2016, with rents higher in three of the five regions of Scotland compared to January. But monthly growth has been slowing. The strongest monthly rise of any regions was in the South of Scotland, where rents are up a modest 0.6% on January 2016, down from 1% month on month in January, and 1.3% in December 2015.
After this, Edinburgh and the Lothians and the East of Scotland witnessed monthly rent increases of 0.3% and 0.2% respectively in February.
In two regions, rents have fallen compared to the previous month. The Highland and Islands have experienced the steepest drop in rents since January, falling 1.4%, the fifth monthly fall in a row. Glasgow and Clyde have also seen rents fall on a monthly basis, down 0.7% in February.
