Rents in Scotland fell marginally in the final three months of 2017, the latest figures show.
Fresh data from letting agent portal CityLets reveals that average rents in Scotland dropped 0.7% on the year to stand at £734 per month.
Thomas Ashdown, managing director of Citylets, said downward pressure from parts of the central belt coupled with continued falls, albeit stabilising, in Aberdeen, proved a drag on the national average.
However, Glasgow bucked the national trend, with rents in the city, at an average of £742 per month, higher than the national average for the first time, which Ashdown described as a “significant event” for the PRS in Scotland’s largest city.
Commenting on the latest report, Ashdown continued: “Whether this [trend] continues or not remains to be seen and whilst growth in Edinburgh at some level is almost guaranteed, much will depend on the drag exerted on the Scottish average by markets elsewhere such as Aberdeen.”
The average property to rent in Glasgow at £742 per month became more expensive than the national average in Q4 2017 representing a significant milestone for the rental sector in Scotland’s largest city. At £8 above the Scottish average rents in Glasgow are now just £13 below Aberdeen and closing (£27 as at Q3 2017 and £33 as at Q2 2017). Whilst this news may only serve to stiffen the resolve in some quarters to introduce rent controls, it must be noted that these figures pertain only to the open market. There is at this time no data on the behaviour of the ‘closed market’ i.e. mid tenancy rent rises. Indeed rental growth seems to have fallen to a new lower rate (of circa 2%) and it will be interesting to see what happens now in 2018.
The average property to lease in Aberdeen is now £755 per month, down 4.3% on the previous year but representing further improvement on last quarter. Whilst one-, two-, and three-bed properties fell, four-bed properties rose 5.6% year-on-year. Rents remain above the national average and typically take 50 days to rent. After a tumultuous period for the city, average rents have fallen around 4% on average on the five year view. It would be fair to believe that the market will fully level off this year.
The figures for Edinburgh Q4 2017 suggest that the annual rate of growth for the capital has found a new level at around 3%. This is perhaps unsurprising given the sustained period of circa 5-6% growth recorded in previous quarters. Average property to rent in Edinburgh rose 3.3% y-o-y to £1016 per month. Rents in Edinburgh are up circa 5% on average on the five-year view and circa 4% on the three-year.
The main one- and two-bed markets rose at 3.5% and 2.7% y-o-y respectively with one-beds typically taking just 17 days to let even in the slowest period of the year. Subsequent reports will confirm either way whether growth has indeed found a reduced level and will be keenly awaited by both Tenants and Landlords alike.
Dundee/West Lothian/South Lanarkshire/Renfrewshire
Dundee experienced a hefty y-o-y fall at the end of 2017 driven down by steep falls in the larger three- and four-bed properties. Average rents fell 7.5% to £552 with only one-bed rentals posting positive growth at 0.3%. In West Lothian, four-bed properties also fell heavily however all other main markets rose providing for sustained growth in one of Edinburgh’s main computer belts. Rents in South Lanarkshire and Renfrewshire both edged higher at 3.7% and 1.9% respectively.
Commenting on the Scottish market, Andrew Meehan of Rettie & Co, said: “Strong demand for accommodation in Edinburgh and Glasgow will likely continue to support the rental market 2018. A key factor to watch will be how the PRT impacts the rental sector, and whether increased tenant security and the removal of ‘no fault’ grounds will materially impact market operation.
“The festival rental market in Edinburgh will also be a key topic in 2018, as landlords seek to work around the restrictions of the PRT, and with the Scottish Government also considering possible restrictions on Airbnb.”