Rents increases in Scotland well below inflation, new report shows
Over the last four years the Scottish private rental sector has experienced average rent increases considerably below inflation, according to the latest quarterly report and analysis from Lettingweb.
It shows that the cost of private renting from 2010 to 2014 has risen by an average of 6.9% against a rate of inflation over the period of 12.8% and the picture of the Scottish private rented sector is a healthy one.
‘Average rent increases are considerably below inflation across the country. The cost of private renting over the four years from 2010 to 2014 has risen significantly less than the rate of inflation, the report says.
It adds that while it is clear private rental is good value in the markets where there is good supply, a detailed analysis shows that cities such as Aberdeen are facing particular pressures due to lack of supply.
Overall the average monthly rent for a two bed property in Scotland was £606 in the Spring of 2010 and if rents had risen at the same rate as inflation that figure would now be £683 but the actual figure for Spring 2014 is considerably less at £648.
The data also shows that from 2010 to 2014 average two bed rents have risen by 6.9% and while the annual rise of 4.6% is above inflation, this is still considerably less than the rent rises seen in the social rented sector.
However, Aberdeen is an exception to the rule that rents are generally rising at below the rate of inflation. A two bed property now costs an average of £1,007 per month, up 14.7% on the year, and the firm says this is due to enormous demand from flexible high income workers when there is very low housing supply within the city.
Edinburgh is Scotland’s largest private rental market, and it has seen its private rented sector population more than double in the last decade. Rents are up 6.8% year on year, with two bed rents now averaging £785. This is due to rising demand and competition for property caused by an improving economy, growing population and very limited new supply.
At 13.9% from 2010 to 2014, Edinburgh is the only local authority other than Aberdeen to record a rise above the rate of inflation.
The report points out that a significant increase in sales, along with insufficient investment in new build are likely to have been contributing factors.
The analysis also shows that Glasgow is beginning to trend closer to the Scottish average than it has historically with the cost of a two bed rental now averaging £642 compared to the Scottish average of £648.
Rents in Glasgow have now increased 8.1% year on year and the report suggests this may be related to a substantial increase in sales of flats which may have reduced the supply of rental stock. Glasgow’s marketing period has reduced from 32 days to 28 days year on year, and the report says this is another indicator of rising demand.
The postcode districts of G3 in the City Centre and G12 in the West End display the highest rental figures, £814 and £832 respectively but Dowanhill is the most expensive neighbourhood in Glasgow with rents priced at £924.
‘This is our most in-depth and informative analysis of Scotland’s Private Rented Sector to date. It shows that Scotland’s PRS is thriving at the moment, but there are localised issues which are caused by a lack of supply,’ said Dan Cookson, head of research at Lettingweb.
‘It also shows that in an efficient private market prices can go down where demand is low and over supply exists,’ he pointed out.