Sweet dreams for landlords as rentals recover - David Alexander

When someone dips into a tin of Quality Street – more people are thought to make a grab for the chocolate, hazelnut and caramel one wrapped in a distinctive purple wrapping than any other – probably relatively few realise that the brand is named after a theatrical play.

David Alexander is managing director of DJ Alexander

Quality Street is a quintessentially English play – a comedy about two sisters who start a school for “genteel children” in the early 19th century - yet the author was a Scotsman, JM Barrie (of Peter Pan fame) and the title chosen was said not to be based on a street of whitewashed houses in Regency London but on Ann Street in Edinburgh.

Ann Street has had a more pertinent claim to fame, as the chosen residence as some of Scotland’s “great and good”, something which has consistently given it the unofficial title of Edinburgh’s most expensive address as well as having been named one of the most exclusive residential streets in the UK.

As if to emphasise the high-end demand applying to Ann Street, last month our office secured a £7000 monthly rental on a five-bedroom town house there…..within 24 hours of the property going on the market.

Front of property.

Now, the Edinburgh market is such that a monthly residential rental of £7,000 is not unique but I cannot remember a property marketed at this price level securing a tenant within 24 hours of being listed.

However, headline-grabbing as it undoubtedly was, this deal epitomises a resurgence across the rental market across Edinburgh – from properties like the above in the New Town to modest one-bedroom flats in the dock area of Leith. It is no exaggeration to say that activity has increased enormously in recent weeks with demand reaching new heights and volumes greater than pre-pandemic levels. One recently-listed HMO (Home of Multiple Occupation) attracted no less than 78 enquiries.

This game changer is obviously a follow-on from the economy having been brought back to life over the last few month with properties being let in a matter of days after being listed. Parallel to this rental levels have also recovered.

The rental market fell off a cliff shortly after Boris Johnson announced the pandemic-related restrictions at the end of March last year. There was a partial recovery in the autumn but demand went into reverse again when lockdown was reintroduced. Even as late as the spring of this year the situation continued to be difficult. Just three months ago there were as many as 1,900 properties available to rent in Edinburgh alone, a figure which, at the time of writing, has dropped to just over 600. People are wanting to rent again.

Edinburgh is undoubtedly the centre of extremely high levels of demand at present, but we are seeing increased activity in the private rental market across Scotland.

The wider concern is that demand may now be outstripping supply, something I would have thought inconceivable as recently as Easter. This is likely to lead to a shortage of available properties and rising rental prices in the short to medium term.

I believe this situation will persist in the coming months particularly if we start to have an inflow of people back into cities and towns to work, and the potential return of EU citizens to work in the hospitality and retail sectors if they can get the proper accreditation.

Another factor likely to exacerbate the situation is more and more short-stay landlords are starting to

return their properties to the tourist/leisure market. And the spectre of rent controls – to which this column alluded last week – is unlikely to help matters.

On the other hand, with rents recovering and – crucially – capital values on an upward surge, there may be a resurgence of interest in property by people disappointed by returns from savings and investments. Clearly, that is something to be welcomed.

David Alexander is managing director of DJ Alexander