The latest Citylets report for the Scottish PRS to Q1 2015 confirms that the average rent in Scotland has continued to rise with strong gains in its 2 main cities of Edinburgh and Glasgow. However segments of the Aberdeen market have begun to fall, led lower by the softening of the oil price and its knock on effect to the local economy.
Rents in Scotland on the whole rose by 7.4% over the year to March 31st to stand at an average high of £751 per month. National rents have risen 16.4% since 2008, around 2.5% per year approximately the same as long term inflation.
Properties of all size (1-4 beds) saw rent increases over the year with 4 beds rising the most at 9.7% reflecting the increased demand for family homes to rent across the country.
Edinburgh and Glasgow recorded similar annual growth of 7.7% and 8.1% respectively and Aberdeen also grew but at 2.2% representing a significant slowdown on annual inflation. Indeed the Aberdeen market no longer seems to be on a homogenous drive upwards with clear demarcation between small properties, which rose in value over the year, and large properties which fell.
Citylets founder, Thomas Ashdown, also expressed concern at the current trajectory of the Scottish PRS in its major cities upon the release of the latest report in light of recent affirmations on likely legislative change.
Ashdown, who founded Citylets back 1999, singled out the Scottish Government’s apparent commitment to end ‘no fault’ grounds for repossession.
“We fully understand and support the intent to make renting in the PRS a better place. However, as I understand it, measures seem set to be introduced that could further limit supply at a time when there is a chronic shortage in major cities. The plan to have special measures to deal with rent rises in these areas seems like an overt case of addressing the symptoms whilst exacerbating the root cause.
There is no doubt that many small scale landlords will and indeed have already left the sector due to the increasing burden of legislation and spectre of decreased control over their asset. That being the case, the need to ensure favourable conditions for institutional investment is surely paramount yet it is presently uncertain as to whether this will be achieved near term.
The inexorable rise of the Edinburgh market continues, with average rents up 7.7% on last year to £913 per month. With 8 consecutive quarterly rises since q1 2013 the trajectory for the Scottish capital now indeed mirrors that seen in Aberdeen in recent years.
1-4 bed properties recorded rises of between 4.6 and 7.5% and TTLs fall with the average (mean) property now taking just 21 days to let. 1 bed properties are moving fastest at just 16 days on average and 83% are let within a month. Many agents report portfolio average- as measured by median- TTLs in single figures.
Rents in Glasgow continue to edge up at a steeper rate than in previous years, now at an all time high of £679 per month, up 8.1% year on year. However TTLs are not falling across the board as per the capital but still moving well with the typical property taking 1 month to let, down only slightly on last year by 1 day. Popular 2 bed properties saw a significant 9.2% annual rise to £690 per month but again it was the 1 bed properties moving fastest with 69% let within a month.
There are signs that the Aberdeen market may finally be cooling off. Whilst rents are up 2.2% on the year at £1089 per month, this represents both a fall from Q4 2014 and a considerable slow down in annual inflation between recent quarters, down from 8% annual growth as at Q4 2014.
However falls are attributable to the larger 3 and 4 bed properties, down by 6% and 3.5% respectively, whilst 1 and 2 beds continue to record YOY rises. All property types took longer to rent than a year ago, by on average an extra 13 days, however the typical property still takes approximately just 1 month to let at well over £1000.
Dundee continues to buck the trend for major cities recording a 1.3% annual fall in average rents to £587 per month but with average TTL remaining almost unchanged on last year at 45 days. Only 3 bed properties achieved positive annual growth at 0.3% but 4 beds saw the largest fall at 8.5% down to £1018 per month.
On average properties on Dundee rent for around 50% less than its oil rich neighbour and takes twice as long to rent as the capital where a chronic shortage of supply seems to have taken hold.
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