PRS Market Performance 1st Feb 2017
Citylets have recently released their quarterly report, providing information about the current rental climate Scotland wide. Overall they record national figures being down 0.9% year on year to stand at an average of £739pcm. However this figure is being dragged down by falling rents in Aberdeen. Edinburgh saw annual growth of 3.6%, and the Central Belt 4.9%.
Average rents in Edinburgh are £984pcm, up 3.6% year on year. However this is a dip from Citylets Q3 when they broke through the £1000 mark. Demand for 1 and 2 bedroom flats in Edinburgh remains strong with a rise of around 6%. Time to let is an average of 31 days, and 61% of properties are let within a month.
And so what lies ahead for the Private Rented Sector in Scotland?
Researches have predicted soaring private rents in Scotland’s main cities over the next 5 years because of the lack of new homes being built (JLL). It is thought that house builders will be cautious because of Brexit and a possible second referendum, therefore stock will remain low. The study predicts that rent in Edinburgh will increase by 20% by 2021.
Further pressure is being put on housing by our ageing population and more people living alone. Statistics released by the National Records of Scotland reveal the number of households in Scotland is predicted to continue to increase, rising by 345,000 between 2014 and 2039. Households headed by someone aged 70+ is projected to increase by 65%, compared to an increase of 2% for those under 70. Older people are more likely to live alone than younger people, and the number of people aged 70 and over living alone is projected to increase by 60% over the next 25 years, to 150,000 men and 260,000 women.
Furthermore, household numbers are projected to increase in almost every local authority area over the next 25 years, with the largest projected increases in Midlothian and the City of Edinburgh.
Throughout 2016 the rental market has remained strong, in spite of challenges for landlords with the 3% Land & Buildings Transaction Tax, the introduction of new legislation, and Brexit. As long as demand continues to outstrip supply, it is unlikely things are going to change anytime soon.