Market Analysis 1st Nov 2016
The latest Citylets report shows that average Scottish rents are continuing their upward trajectory due to strong growth in Edinburgh and Glasgow, and a chronic lack of rental housing stock, particularly across the Central Belt.
The Private Rented Sector (PRS) in Scotland now represents 14% (350,000) of all households, and it is set to keep on growing. The Royal Institute of Chartered Surveyors (RICS) have revealed that the UK is facing a shortfall of 1.8 million homes by 2025, as home ownership becomes increasingly unaffordable and more and more people turn to renting. RICS are calling on the government to make buy to let investment more of an attractive option, for example by abolishing the recent changes to Stamp Duty, and reconsidering forthcoming changes to mortgage tax relief. Whilst this will provide some relief, it is widely recognised that there is a need for large scale build to rent property investment.
Chief executive of the Scottish Association of Landlords John Blackwood visited Her Majesty's Treasury in London to push for a review of the tax changes before the Chancellor’s Autumn Statement on November 23. After the meeting John explained: "The treasury officials listened to our research and evidence but made no commitment to any change of plan on this ill-considered and unfair set of tax changes. We will continue to oppose the tax changes which threaten investment in Scotland and will harm the supply of affordable housing.”
Scotland wide, rents have risen 2.4% from this time last year. 61% of properties are being let within a month. Average rents in Edinburgh have reached £1000 per month, up 7.6% over the year. Within Edinburgh 41% of 1 bed properties are let within a week, with 2 bed properties letting within around 20 days. Edinburgh properties continue to enjoy strong capital growth, along with healthy yields.
Regarding Brexit, there is no change to date reported across Scotland. However recent research by the National Landlords Association (NLA) shows that a third of landlords are concerned that leaving Europe will impact on who they can attract as tenants. The UK-wide results reveal that 39% think that Brexit will not affect business; 35% think the result will have a negative impact; and 21% are unsure. 5% think the impact will be positive. Only time will tell. Post Brexit buy to let mortgage products continue to be offered at very attractive rates, which means that re-mortgaging to move on to your next property purchase, or buying your first buy to let property is well worth consideration.
For now, the outlook is rosy for landlords. The supply / demand issue is set to continue for the foreseeable future, as is the trend for increasing rents and short times to let, making buy to let an attractive investment for landlords.