Residential rents in Scotland increased in all regions in March with demand for family homes driving up values overall, according to the latest buy to let index.
An annual rise of 3.8% year on year takes the average rent in Scotland to £565 per month with rents increasing faster in the Highlands and Islands region, according to the index from Your Move Scotland.
In the Highlands and Islands region rents grew 0.8% between February and March and they were up by 0.5% in the South of Scotland with both experiencing increased demand for family properties. These three and four bed properties have been particularity in demand in the Dumfries and Highlands areas.
The South of Scotland saw rents rise fastest on an annual basis, up 5.9%, but it was a mixed picture for other parts of the country. The East of Scotland saw a rise of 2.4% and Edinburgh and the Lothians was up 2.3% year on year but rents fell by 3% in Glasgow and Clyde and by 1.9% in the Highlands and Islands year on year.
Fears that another Scottish independence referendum could destabilise the rental market appear to have been unfounded, according to Brian Moran, lettings director for Your Move Scotland but he said it remains to be seen what the long term impact will be and the UK general election in June may also filter through in future surveys.
A breakdown of the figures show that the most expensive region of Scotland continued to be the Edinburgh and Lothians area where the market remains strong due to high demand from tenants, especially given the strong student population.
The average rent in Edinburgh and the Lothians was £651 and the closest competition came from the Highlands and Islands where the typical property cost £690 per calendar month. At the other end of the scale, the East of Scotland is the cheapest place to rent a property in the country with an average cost of £536 a month.
‘March saw a stellar performance across Scotland as every single region recorded higher rents than the previous month. Demand is increasing in segments of the market such as family homes, showing there is room for expansion of the rental sector,’ said Moran.
‘This increased demand is being seen in areas such as the Highlands and Dumfries, suggesting the rental sector is extending beyond the big cities. Yield levels have actually increased this month, bucking the trend seen in the rest of the UK. This shows Scotland remains a great place to invest, as well as a great place to live,’ he added.
The figures show that rental properties in Scotland continued to return high yields for landlords and property investors, with average yield levels of 5%, higher than then 4.9% recorded the previous month and in March 2016.
This yield also compares strongly to property investment in other parts of the UK. Landlords in Scotland continue to see much better returns than the average investor in England and Wales, where the average yield in March stood at 4.5%.
Only landlords in the North East and North West regions of England enjoyed better or equal returns at 5.2% and 5% respectively.
