Average rents in Scotland fell by 0.7% year on year in the final quarter of 2017 to £734 per month with all four main cities seeing rents decline, according to the latest index.
Whilst this represents an increase in the rate of annual decline, it would be too early to confidently conclude whether this is the beginning of a new trend at the national level, according to the index report from Citylets.
It points out that a seasonal dip is not unusual at the end of a year which is the slowest time of the year for the private rented sector. But despite this rents in Glasgow reached £742 per month, higher than the national average for the first time.
The lettings market in Scotland’s largest city continues to move quickly at 24 days on average, just two days slower than the fourth quarter of 2016 and 70% of Glasgow properties are let within a month.
The average rent in Aberdeen is now £755 per month, down 4.3% year on year but the report points out that this is an improvement from minus 6.6% recorded in the previous quarter. The report suggests that it is reasonable to believe that rents will fully level off in 2018.
Also, in Aberdeen rents are clearly above the national average with properties taking an average of 50 days to let. As with the third quarter of 2017, it was larger four bed properties that fared best indeed recording a rise of 5.6% year on year.
Rents in Edinburgh again rose 3.3% year on year to an average of £1,016 per month and the lettings market in the city is moving at around the same speed as 2016, taking 23 days to let on average, up two days on the fourth quarter 2016.
In Edinburgh it was one and two bedroom properties that led the rise recording 3.5% and 2.7% growth respectively with one bed properties taking just 17 days on average to rent. Both markets are up 27% over a five year period.
Falls in the average price of larger three and four bed properties dragged down the average rent in Dundee to £552 per month, some 7.5% lower than last year, while in West Lothian, rents for four bed properties fell but the one, two and three bed markets all rose, continuing a general upward trajectory for the majority of the market. South Lanarkshire and Renfrewshire both rose driven by solid performance in the one bed markets.
According to Andrew Meehan of Rettie & Co strong demand for accommodation in Edinburgh and Glasgow will likely continue to support the rental market 2018 and a key factor to watch will be how the new tenancies affect the rental sector.
‘The festival rental market in Edinburgh will also be a key topic in 2018, as landlords seek to work around the restrictions and with the Scottish Government also considering possible restrictions on Airbnb. A final hot topic will be Rent Pressure Zones,’ he said.
The outlook is positive for landlords, according to Matthew Wilcken of The Flat Company. ‘The introduction of the new Private Residential Tenancy at the start of December appears to have gone without any major hiccups and we are still seeing an extremely busy and buoyant PRS market,’ he said.
‘Landlord’s yields have been increasing in the last couple of years especially for properties rented for a combination of long term and short term lets. For these properties it’s possible to achieve rental yields of up to 10%, this compares very favourably to the historic yield for long term lets in Edinburgh of 3% to 4%,’ he explained.
‘The trade-off for this increase in yield is that tenants now expect a higher standard of accommodation and a more professional and strictly regulated PRS,’ he added.
