Rents in the private rented sector in Scotland eased slightly in the third quarter of 2017 as at least two councils consider rent controls, the latest index shows.
Growth continued in the central belt but at lower levels than seen previously and coupled with continued falls in Aberdeen which resulted in rents falling by 0.4% overall year on year, according to the quarterly report from Citylets.
Growth was led by Renfrewshire with an annual rise of 4.9%, followed by a rise of 3.5% in Edinburgh but growth in Glasgow slowed to 1.9% and in Aberdeen rents are still 6.6% below a year ago, although the lettings market in the city has stabilised from the -20% recorded in 2016.
The average rent in Scotland is now £772 per month and the firm points out that two councils in Edinburgh and Glasgow are discussing the introduction of rent caps under new powers given to councils by the Scottish Parliament which come into effect in December.
Rents in Edinburgh are the highest at an average of £1,048 per month but the data shows that the rate of growth has eased in recent quarters and in Glasgow average rents now stand at £747 with growth down from the 5% recorded in the second quarter of 2017.
In other locations around Scotland the rental market is more mixed with rents falling 1% in Dundee to an average of £584 but rising 1.2% on average in West Lothian to £665 per month.
According to Ian Lawson, chief executive officer of Lomond Capital, buy to let remains on the rise in the Central Belt with institutional investor activity in Scotland’s property market remaining high.
‘With some economic and political hurdles still to overcome, we need to work hard to influence the rest of the UK, which may still be undecided in investing in Scotland due to the perceived onerous tenancy changes and changes to regulations. Investors need to be comforted that the changes will not restrict them from making gains in a growth market with high rental values, prospects for further income growth as well as growing capital appreciation,’ he said.
Ross Macleod of Macleod Lettings pointed out that landlords are facing more controls with the new legislation allowing rent controls. He explained that it is the pressure being put on landlords by way of removing tax breaks and increased legislation that has driven rents higher.
‘The property market in Scotland cannot be labelled as one, as each city and each area within that city has its own marketplace. Only time will tell what impact this has on the PRS,’ he added.
