The rental market north of the border remains strong, but demand fell across all regions, especially in areas with high numbers of migrants from European Union countries as an emerging trend for European Union migrants – particularly from Poland – to leave the country and seek employment elsewhere starts to have an impact across the country, new figures from Your Move Scotland shows.
The average property in Scotland now rents for £575 per calendar month, up from the £571pcm recorded a month earlier, but this headline figure masks divides between the five regions surveyed.
The strongest performance came in the South of Scotland where prices increased by 4.2% in the last 12 months to hit £560pcm.
“The Scottish rental market continues to grow as a whole, despite variations on a regional basis,” said Brian Moran, letting director at Your Move Scotland.
But rental demand across all areas surveyed has weakened, especially in the Glasgow and Clyde and Highlands and Islands regions, which have been particularly affected by this ‘Brexit effect’.
The steepest decline in rental values was seen in the Highlands and Islands region, where rents have now fallen by 3.3% over the past 12 months and now stand at £586pcm.
Aside from a fall in demand from EU migrants, the rental market in the Highlands and Islands region has also been affected by the Scottish government’s LIFT Scheme (Low-cost Initiative for First-Time buyers).
The initiative promotes 0% deposit mortgages and has helped more people move from being renters to homeowners. Some of the most popular areas are within Dingwall and surrounding villages – all of which are within easy reach of the major employment centre of Inverness.
Moran continued: “This month we have continued to see demand reduce in several areas – particularly those with high numbers of migrants from European Union countries,” Moran added.
“Government schemes have also had an impact on the rental market with more people being able to purchase their first home and leave the rental arena.”
The East of Scotland remained the cheapest place to rent in Scotland in February. The average property let for £535 a month – 2.3% higher than the same point in 2016.
Despite the overall dip in rents, yields remain solid, with buy-to-let landlords continuing to see strong returns from the Scottish rental market in February.
The average yield in February was 4.9%, the same level seen both last month and in February last year, Your Move Scotland found.
This yield also compares strongly to property investment in other parts of the UK, with landlords in Scotland continuing to see significantly better returns than the average investor in England and Wales, where the average yield in February stood at 4.1%.
Only landlords in the North East and North West regions of England enjoyed better returns – 5.3% and 5% respectively in February.
“For landlords and investors yields have remained strong – particularly when compared to the returns on property in England and Wales,” Moran added.