Average Rent Levels Rising Fast In Scotland

21st August 2023

Average rents in Scotland for new tenancies have risen by double digits for the third time in a row since the introduction of the Cost of Living (Tenant Protection) (Scotland) Act 2022, underlining what many in the industry feared from the outset that the new legislation would exacerbate the supply demand imbalance. It currently appears to be sustained in vice-like grip sending rents soaring across the country.

The average property to rent in Scotland, having surpassed the £1000 mark for the first time in Q1 2023, continued to rise to average £1081 per month but with the rate of growth easing to 11.4% Year on Year (YOY), down from 12.4% recorded the previous quarter.

The average property to rent now takes 19 days within a range of 16-24 days for 1-4 bedroom property types. Annual price appreciation for all major cities was recorded at between 13% and 18%.

An initial rent freeze was announced in September 2022, before being extended until 31 March 2023, where it was then replaced by a cap preventing private landlords from increasing the rent my more than 3% which will not expire until 30 September 2023.

Edinburgh and Glasgow were the areas recorded with the highest monthly increase, with rents priced at an average of £1,477 and £1,141 respectively, according to the data.

In Dundee, rent averaged £891; £871 in West Lothian; £835 in Aberdeen; £768 in South Lanarkshire; and £745 in Renfrewshire.

The rent gap between those already in rented accommodation and those seeking new properties to rent will now be apparent for many would-be movers looking to move within the sector on a supply choice further. The Act was another 6 months from September 2023
as to what choice there may be for tenants by the end of that period.

Hopes of a linear reduction in average mortgage rates in 2023 were dashed late in the quarter with rates taking a sharp turn upwards, undermining confidence for would-be buyers that more favourable
conditions would return soon. Mortgaged landlords too, facing stiffer demands on their cost base and with a rent cap in place for the duration thereafter, will naturally seek maximum uplift in rents
at new tenancy formation with tenant demand levels supporting such ambitions as the market enters the traditionally busiest period of the year and beyond.

All macro regions reported on by Citylets witnessed a double digit increase in rents in the second quarter of 2023, with the exception of South Lanarkshire (7.4%).

The market continues at pace across all regions and all property types with some agents reporting up to 100 enquiries per property advertised. Students in traditional HMO properties now routinely
hold onto their properties for the next academic year, a change from the long established culture in some cities of 9 month rentals. Word is out, supply is in short order.

Hopes that the introduction of new stringent short term lets legislation may soon introduce more supply in some urban areas, where local councils seek to use new powers to reduce holiday let
volumes, were dashed when a judicial review of parts of the proposed legislation was deemed unlawful. The potential positive impact for supply to Scotland's PRS is significant, as highlighted so
clearly during the lockdown era of the pandemic, however many believe this has simply been delayed rather than cancelled.

There is little prospect of material improvement in the months ahead. High demand and low supply remains the outlook for 2023 and the question of note is just how intense the shortage of properties may be by the end of Q3.

Average stock levels for Q2 2023, whilst up on the historic lows of recent quarters, were 10% down on the previous year entering the traditional busiest Q3 quarter.

The average property to rent in Scotland, having surpassed the £1000 mark for the first time in Q1 2023, continued to rise to
average £1081 per month but with the rate of growth easing to 11.4% Year on Year (YOY), down from 12.4% recorded the previous quarter. The average property to rent now takes 19 days within a range of 16-24 days for 1-4 bedroom property types. Annual price appreciation for all major cities was recorded at between 13% and 18%.

Read the full CityLets Report HERE
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