‘Welcome relief’ in Scots rent market
AVERAGE monthly rents in Scotland are now just £6 higher than a year ago, a report has found.
Experts said the pace of annual growth slowed over the course of the past 12 months, providing some “welcome relief” to tenants saving for a deposit for their own home.
The Your Move buy-to-let index revealed average rents rose by 1.2 per cent, with growth slowing over the past 12 months from a 3.9 per cent (£20) annual jump in rent prices seen in 2013.
Edinburgh and the Lothians was the only area seeing an uptick in annual rent growth over the past year from 2.5 per cent to 4.5 per cent taking it to £611 per month for December.
Christine Campbell, regional managing director of Your Move, said: “Annual rent growth has braked sharply over 2014, reducing the speed of rent rises to a sustainable and affordable pace. This is providing some welcome relief to the thousands of renters itching to jump on the housing ladder, who are already faced with enough hurdles to saving a deposit.
“Only Edinburgh is moving against the grain, as demand for homes to let keeps on banging at the gates, and fierce competition feeds bolder rent rises than elsewhere across Scotland.
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“This wider downturn in growth during 2014 marks a return to the natural market rhythm. Scottish rents were holding fast on an even keel throughout 2011 and 2012, until the abolition of tenancy fees in November 2012 sparked a new tide of unnaturally steep rent hikes. This should act as cautionary tale for policymakers considering further constricting changes to lettings legislation. The rental market is thriving by its own hand, and too much undue intervention may poison the current climate of affordability.
“Scaring landlords out of the rental market would exacerbate the current housing shortage, and wound thousands of tenants as competition hots up. Buy-to-let investment is a vital remedy for the current housing shortage, and for the health of tenant finances.”
December saw the average residential rent in Scotland drop slightly by 0.4 per cent to £536 but the month also saw the proportion of late rent rise to 7.2 per cent - the highest level since May 2013.
Ms Campbell added: “Christmas is a brutal time for bank balances, and rent payments fell by the wayside in December in the clamour of all the additional costs. But while we expect a certain seasonal setback, over the year as a whole, tenant finances have retreated. After some improvements in the summer months, the cycle hasn’t been broken, and we’re back to where we started - with too many Scottish households still mired in financial difficulty and struggling to pay the rent on time.”
The analysis revealed the average landlord in Scotland has seen a return, before any mortgage payments or maintenance costs, of £11,962 over the twelve months to December.
With house price growth recovering, and if the value of rental properties continues to climb at the same rate witnessed over the last three months, the average buy-to-let investor in Scotland could expect to make an overall annual return of 7.9 per cent in the next twelve months, equivalent to £12,570 per property, according to the report.
Ms Campbell added: “These favourable conditions for landlords will filter down to tenants’ pockets too. As property investors expand their portfolio and invest further in buy-to-let, greater choice of homes to let will ensure rent rises remain on a smoother path.”
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