David Alexander comment: The evolving fortunes of Scottish rented housing

If, like me, you attended a comprehensive school in one of the west of Scotland’s provincial towns during the 1970s, at least three-quarters of fellow pupils were likely to live in a local authority house.
Unsurprisingly, the 'star of the show' is the capital city, says Alexander. Picture: contributed.Unsurprisingly, the 'star of the show' is the capital city, says Alexander. Picture: contributed.
Unsurprisingly, the 'star of the show' is the capital city, says Alexander. Picture: contributed.

Across Scotland as a whole, the figure was more than 50 per cent. More than four decades later, “social housing” as a percentage of stock is just 22 per cent, with more than 60 per cent in owner-occupation and the remainder privately-rented. This is a massive shift, which has taken place over 30 years rather than 40, as it was not until the mid-1980s that take-up of “the right to buy” (council properties) got into full swing.

The above figures come courtesy of BBC Scotland, which is currently examining the housing market. Of particular interest to me are the statistics relating to private rents in our four major cities – Glasgow, Edinburgh, Aberdeen and Dundee – over the past ten years. Provided by CityLets, these provide an important insight into the rise in average monthly rents in the private sector over the decade. But behind these are obviously economic and social issues that determine the level of demand.

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The biggest example of this, perhaps, is the decline in rents in Aberdeen, mainly as a result of the downturn in oil and gas activity. Ten years ago, the average monthly rent in the Granite City was just under £900 per calendar month, which was by far the highest in Scotland, a position it held as recently as four years ago. Since then, rents in Aberdeen have dipped below the Scottish average of just under £800 a month.

In contrast, rents in Glasgow have risen substantially in the last five years – from £600-plus to £850-plus a month. However, this city is something of an enigma; rental rates for mid-Victorian properties in the Park Circus area, which have been given classic refurbishments, can be as high as those for some of the best properties in Edinburgh’s New Town and demand (from professionals and students from wealthier families) for flats in the university area is as high as ever. However, this is balanced by huge swathes of low-rent private housing in other parts of the city, so it is difficult to discern what types of housing are actually pushing up this “average”. The situation is also complicated by “Glasgow” being a generic term for not just the city proper but for independent suburban areas of extensive high-value housing (for example, Bearsden in the north) just beyond the boundary – “of Glasgow” but not “in Glasgow”, you could say.

Unsurprisingly, the “star of the show” (if you can put it like that) is the capital city, where average rents have grown in the past ten years from around £750 to just under £1,100 a month – about £300 higher than the Scottish average and £500 more than Dundee, which has shown the lowest rate of rental growth, despite its growing reputation as a centre of technical excellence.

In reality, Edinburgh has a surprisingly varied level of housing stock available to rent, but demand is heaviest for certain key areas where those with above-average spending power wish to be. Specifically, that means New Town streets that professionals find affordable plus the “mid-range” districts of Stockbridge, Comely Bank, Bruntsfield, Marchmont, Viewforth and Polmont. All of them provide easy access to the city centre, benefit from a good range of local shops and services, and for those who wish it can offer a thriving social scene. I suspect it is these locations that are largely responsible for driving up average rents across the capital.

As for lower-rent areas in and around Edinburgh, the fact that Scotland’s population has grown by 400,000 since 2001 has undoubtedly had an effect. I remain convinced that extending “free movement” to the people of Europe’s former Communist countries has been good for our economy. But perhaps the politicians who sanctioned it might have put greater thought into the consequences of this additional demand for the private rented housing sector.

David Alexander is MD of DJ Alexander