Residential rents in Scotland fell in the fourth quarter of 2016, down 0.9% year on year to an average of £739 per month, the latest index data shows.
The national average, however, has been affected by falls in Aberdeen where the economy has been hit by falls on oil prices, although a recovery in the city’s market is expected in the coming months, according to the index from Citylets.
The decline in Aberdeen has been countered to a certain extent by 6% growth in Edinburgh and also growth in Glasgow. However a slight, possibly seasonal, cooling in the central belt in the final quarter of 2016 saw annual growth slip into mild negative territory.
The report points out that rents in Aberdeen have begun to level off, down 15.4% down year on year but less than the 20% recorded in the previous months. The report predicts that rents in Aberdeen will hit national average later this year.
Average rents in Edinburgh, which broke through the £1,000 mark to reach £1014 in the third quarter fell back to £984 per month but are up 3.6% year on year. The report says that it will be interesting to see whether this returns to positive next quarter or if growth in Edinburgh in particular has finally cooled.
The Glasgow market continues its rise recording 3.9% annual growth to stand at £728 on average but down from the 7.2% recorded in the previous quarter and the report says that, as with Edinburgh, the fall is possibly seasonal.
Rents in Dundee increased 4.7% year on year to an average of £597 while rents in West Lothian again recorded strong growth of 4.9% year on year to £669.
According to Ian Lawson of Braemore Lettings in Edinburgh property investors and landlords saw out early waves of market uncertainty at the beginning of 2016 and have now adjusted their commercial models and are taking full advantage of the very positive year ahead.
‘Rents continue to grow at record levels, especially in the one and two bed markets, and tenant enquiries are plentiful with a continuing shortage of quality stock to match ever increasing demand,’ he added.
According to Fiona Hindshaw of Clyde Property 2016 was a busy year for Scotland’s property and letting market with legislative changes, the imposition of the 3% second property LBTT and Brexit.
‘The general consensus across the board in Scotland is that the lettings market demonstrated continued strength and growth when compared to the same period in 2015 and we expect to see this growth continue in 2017,’ she said.
‘Positive trends include record low interest rates leading to further buy to let investment and as rental prices continue to rise with increasing tenant demand, fuelled in part by a housing shortage, we also see this shortage fuel strong capital growth, reaffirming property as a sound investment for the future,’ she added.
There has been high demand for all levels of rental properties across the spectrum, according to Jamie Kerr of Ben Property, who added that landlords are not being put off by Brexit or tax changes. ‘We are still seeing a strong appetite for investor landlords or those looking to let their existing assets and we expect this to continue well into 2017,’ he pointed out.
However, Adrian Sangster of law firm Aberdein Considine thinks rents in Aberdeen will fall a bit more. ‘We had a busy final quarter of 2016 with more new properties coming on the market and increased lets which is encouraging and hopefully a sign of things to come in 2017,’ he said.
‘It is my opinion that whilst the Aberdeen market has passed the worst, I am anticipating further minor falls in average rentals during the first half of 2017 before we start to see the beginning of a slow recovery,’ he added.
