SCOTTISH rents have reached an all-time high, pushing more tenants into arrears while landlords reap greater financial returns, a letting agent has found.
The average monthly rent in Scotland rose to £527 in November – up £12 on the same period last year (2.2 per cent), according to Your Move’s buy-to-let index.
The proportion of tenants in arrears rose to 6.6 per cent – up from 6.3 per cent in November 2013.
The total annual return for landlords on a typical rental property rose to 8.4 per cent – up from 5.6 per cent in the same period last year.
While tenants are paying out £6,324 a year – an annual rise of £144 – the average annual return for landlords now stands at £12,913.
This figure accounts for house price growth and vacant periods between tenants. It does not include any mortgage payments or other deductions.
Christine Campbell, regional managing director of Your Move, said: “Scottish rents have been steadily edging forwards and reached a new pinnacle in November. Demand and supply are still out of kilter and in highly sought-after employment and cultural nerve-centres like Edinburgh this overflowing competition for homes to let has topped up rent prices.
CONNECT WITH THE SCOTSMAN
• Subscribe to our daily newsletter (requires registration) and get the latest news, sport and business headlines delivered to your inbox every morning
“Increased investment is the only way to alleviate the strain of the current housing shortage and soothe competition for rental homes.
“If buy-to-let investment dries up, and the pool of properties to let contracts, rents will swallow the shortfall and eat into tenant finances.”
She added: “Many households will be basking in confidence at the boosted spending power as inflation continues to tumble.
“But this is only one factor and overall tenant finances across Scotland appear to be stuck in a rut. Long-term financial stability for renters rests on the jobs market.
“It’s not just about getting into work either – but ensuring wage growth for those already in employment accelerates to the next gear, preventing more working households from straying into the red zone and, in the worst-case scenarios, risking eviction.”
She continued: “House prices have dusted themselves off from the flurry of uncertainty which unsteadied growth before the referendum.
“But gross yields were hardly shaken by these tremors [and] buy-to-let continues to stand out as a robust and lucrative investment, and confidence among property investors gives tenants plenty of reason to be optimistic too, as more investment in the sector bolsters the array of homes to let.”
Scottish Labour housing spokesman Michael McMahon said: “These new figures show that we need to reform the private rented sector. It is a scandal that over 100,000 private renters live in poverty.
“Too many families are just getting by, the last thing they need is an exploitative rent hike from a bad landlord.
“That is why Scottish Labour proposed to ban rip-off rent rises.
“The SNP were wrong to vote against our plans earlier this year.
“They joined with the Tories three times in 2014 to block a little protection for tenants. They sided with bad landlords rather than families across Scotland.”
SCOTSMAN TABLET AND IPHONE APPS