AVERAGE monthly rents in Scotland have risen just 1.1 per cent in the last year, the slowest increase in almost two years, new figures show.
The rise was the smallest annual increase since April 2013, according to the latest Buy-to-Let Index from lettings agent network Your Move.
“Such an incremental rise in Scottish rents over the past year shows admirable stability in the private rented sector”Brian Moran
The average residential rent across Scotland increased only £6 in the year to February, reaching £537 per month last month.
On a monthly basis, Scottish rental prices have climbed 0.2 per cent since January, marking the first monthly rent rise since November 2014.
Meanwhile, the financial health of tenants appears to have declined, with February seeing the highest proportion of late rent since December 2012.
Brian Moran, area lettings director at Your Move, said: “Such an incremental rise in Scottish rents over the past year shows admirable stability in the private rented sector.
“Despite high demand for homes to let in the face of the current housing shortage, rent inflation in the lettings market has remained remarkably affordable for tenants.
“After cruising along on a pretty even keel until late 2012, we then saw steep rent rises stack up against tenants - as the abolition of tenancy fees in Scotland knocked the market out of kilter.
“The Scottish private rented sector has subsequently been on quite a rollercoaster ride but rent growth has its feet firmly on the ground once again, and is making steady strides forward.
“But while improvements in the affordability of the lettings market mean that tenants are able to keep up with rent rises, other economic factors are holding them back from making solid financial progress and continuing to drag tenants into the red.”
Edinburgh and the Lothians experienced the strongest annual rent growth, with prices climbing 2.5 per cent (equal to £15) in the twelve months to February 2015, closely followed by Glasgow and Clyde, where rents are up 2.3 per cent (£12) year-on-year.
The Highlands and Islands experienced the biggest annual drop in average rents, which fell 1.6 per cent, equivalent to £9 in cash terms.
Meanwhile, monthly rents in the South of Scotland are 1.5 per cent lower than in February 2014.
While rent rises have decelerated, many tenants are still behind with their payments.
In February 2015 the proportion of late rent rose to 8.1 per cent, its highest level for more than two years.
For landlords the average total annual return on a rental property in Scotland stands at 8.2 per cent in the year to February 2015, up from 8.1 per cent last month, and up 7 per cent on a year ago.
This means that the average buy-to-let investor in Scotland has seen a return, before any mortgage payments or maintenance costs, of £12,689 over the twelve months to February 2015. This rises to £20,955 in Edinburgh on average.
Christine Campbell, regional managing director of Your Move Scotland, said: “The Scottish housing market has hit the ground running at a lively pace in 2015 and we’ve witnessed a strong upturn in annual growth at the same time that property price inflation looks to be flagging across the rest of the UK.
“This marks the next evolution in Scotland’s housing recovery - with property prices now overtaking housing boom records, we can stop looking over our shoulder at the shadow of the financial crash and set our sights firmly on the horizon. But we can’t just rest on our laurels and there is still plenty of ground to make up.”
She added: “With saving for a deposit becoming less of an uphill battle, and armed with attractive mortgage rates, buyers are ready and raring to go, and as this demand trickles through to sales, the housing market looks set to flourish in the coming year.”