The Scottish Rental Market 1st Aug 2015
In the second quarter of 2015 (1st April to 30th June), the Scottish Private Rented Sector (PRS) has continued its upward climb in most areas, with Aberdeen being the main exception, as it bends to reduced oil prices (free market economics in action). Edinburgh recorded strong growth at 7.3% (Citylets), with properties taking an average of 1 month to let. To give an idea of rents, within Edinburgh, the average monthly rent for a 1 bed is £631; £850 for a 2 bed; £1207 for a 3 bed; and £1654 for a 4 bed property (Citylets).
There continues to be demand for good quality rental properties in all areas in which The Key Place operates. Rental values are still increasing as demand outstrips supply, however rents are linked to salaries within the local economy, and as such constrained by affordability. Overall, rent levels remain below the rise in the cost of living since 2008.
Market uncertainty brought about by proposed changes to the PRS (removal of the ‘no fault’ ground for repossession, rent controls), along with UK budget changes to mortgage interest tax relief, will likely impact investment in the rental sector. A Citylets survey recently revealed that 31% of landlords are likely to leave or reduce their portfolios when the ‘no fault’ ground is removed, and 39% are likely to leave or reduce their portfolios if rent controls are introduced. It is claimed that landlords could be forced into putting up rents if their buy-to-let mortgage interest payments are made non tax deductible. With the current shortage in private rented housing, this is not the time to be frightening off investors.
However as far as the renters go, it looks like the trend towards renting is set to continue. Recent research by PricewaterhouseCoopers reveals that 1 in 4 households in the UK will be privately renting by 2025. The trend is particularly strong amongst 20 to 39 year olds, where more than half will be renting privately by 2025. It will take long term increases in housing supply to allow greater affordability amongst would be buyers, and we are a long way from this.
There has been considerable growth within the buy-to-let sector, which now comprises 15% of all mortgage lending, up from 5% 10 years ago. With plenty of buy-to-let mortgage packages available, and rents at an all-time high, investors are continuing to put their money into rental property. It's also only a matter of time until the institutional investors jump on the bandwagon.
So what's stopping you? The Key Place has extensive knowledge of the lettings market gained through years of experience. Over the last year we have been compiling current, relevant local statistics, providing up to the minute information on the rental market in your area, such as average rents by town, number of properties for rent by town, and type of properties for rent by town. These will help inform your buying, renting and selling decisions.
The Key Place can help source high yield properties, find the best mortgage, complete the acquisition and fully manage your investment.