Spotlight on Edinburgh 1st Aug 2016
The latest Citylets report confirms that rents in Edinburgh are continuing a slow but steady climb, with average rents for 1, 2 and 3 bedroom properties up 4% on this time last year.
One bedroom rents enjoyed the fastest rise, up 8.7% on this time last year, now standing at an average of £686 (up from £629); two bedroom rents £846 (up from £812) and three bedroom rents £1,209 (up from £1,159). This brings Edinburgh close to an average rental of £1000. The average return to landlords are up 6.8% (returns have grown by 20.5% in the last three years). Predictions are that rents will continue to grow for the foreseeable future at around 2% - 3% per annum.
Citylets have also revealed that Time to Let (TTL) in Edinburgh continues to fall, now standing at an average of 14 days. 70% of properties let within a month. This confirms that there is strong demand throughout the city. It may be helpful for investors to note that the areas with the lowest TTL are EH8 (13 days), EH9 (12 days) and EH11 (10 days). One and two bedroom properties tend to go faster than 3 bedroom properties. 34% of one bedroom properties let within a week.
For all of these reasons, investors are now looking to Edinburgh for their next buy to let purchase. According to recent reports from property experts, Scotland is well placed to benefit from the fallout from the overheated London property market, with Edinburgh being listed amongst the top 3 European cities in which to invest. It has a stable economy, growing employment (the 2nd fastest growing employment centre in the UK), and continues to attract new businesses which choose to expand into the city.
Edinburgh presents an attractive investment opportunity to many as properties offer high rental returns with strong capital growth, all at what is seen as being an (comparatively if you take London) affordable price.
The Edinburgh property market is notoriously stable, largely unaffected by economic forces which may impact elsewhere. It has a thriving student population, and these are students who often have financially secure parents willing to invest in a buy to let for their child, or to pay higher than average rents for good quality properties. According to the Royal Bank of Scotland’s Student Living Index, Edinburgh is the most expensive place for students to study in the UK – due to a combination of the high rent costs for student flats, and a lower than average term time income. Edinburgh students pay an average of £112.05 on rent per week, compared to around £110 across the UK.
Currently buy to let mortgage packages are more readily available, and confidence in the economy has grown. Brexit has not yet impacted the rental market (see accompanying newsletter article). And bricks and mortar are still seen as a safe bet, especially in the light of our fluctuating stock markets. Typical Edinburgh yields can be around 7% or more, plus capital growth which is predicted to be around 2.5% to 4.5% in 2016 – making the investor significantly more than other current asset classes.
Whilst attracting an increasing number of investors from outwith Scotland, the majority of investors do still come from Scotland and reside within Scotland. Edinburgh is a relatively wealthy city and buy to let investors generally tend to invest in areas with which they are familiar / close to where they live. We therefore see a large number of Edinburgh investors expanding their portfolios within Edinburgh, and reaping the rewards. Indeed, a number of Edinburgh letting agents including The Key Place have reported a surge in interest from landlords over the last few weeks, following the Brexit vote. This shows the confidence in the Edinburgh lettings market in spite of the general uncertainty.
It looks like the Edinburgh rental market is set to continue growing, as long as the finance is available. And for all of the reasons given above, it remains a safe place to invest.
The Key Place can guide you to the right places to identify property values and yields in Edinburgh and can provide you with other useful property related information, so you can make sure you know all you need to know before making your future investment decisions. Get in touch with us now for further information.