What is the CityLets quarterly report?
CityLets is a long-established rental property portal that has published quarterly rental market reports since 2007. The report is based on around 50,000 Scottish rental properties from more than 400 letting agencies.
The CityLet quarterly reports provide valuable information about the state of Scotland’s private rental sector. It offers crucial marketing insight for landlords and letting agents, while it allows tenants to better understand housing trends, including housing supply, competitiveness and average rent costs.
Key trends in the Scottish private rental sector
There has been fluctuation in the Scottish rental market during the pandemic, however the report indicates that demand in urban areas has outstripped demand in suburban and rural areas. This is likely due to more city-based offices reopening to employees.
This is an interesting development, as earlier in the pandemic we saw an increase in popularity of properties out of the cities as more people began working from home. These workers began to see a more rural lifestyle as a realistic goal without the requirement of an office commute five days per week.
Rents are up and time to let is down
Compared with Q1 2021 Scotland’s rental market has experienced a year on year rent increase of 8.5%, averaging £896 per month. This demonstrates that the emerging cost of living crisis has not yet had a strong impact on demand. However some experts remain cautious, citing fears that vulnerable renters could fall into a widespread rent arrears crisis.
Average time to let (the period of time a rental property is available on the market) is down to just 20 days, with 77% of private rental properties let within a month of listing. This is another indicator of strong demand, as renters are moving quickly to secure properties that stand out to them.
Why are rents increasing?
Pandemic-era temporary rental restrictions are bringing notice periods back to pre-pandemic levels. This has allowed landlords to start exiting the rental market and exploring sales options for their properties. Rental stock remains low, although it has risen above all time lows reported in 2021. This has likely put further pressure on the imbalance between supply and demand.
Landlord registration data shows that approximately 22,000 properties have left the private rental sector since 2017, further restricting supply. Measures that would incentivise property owners back to the private rental sector might help to address the acute supply shortage. However, landlords currently seem apprehensive about the Scottish Government’s plan for a ‘New Deal for Tenants’, and may be holding off until the final changes are fully known.
Regional Outlook
While all of Scotland is seeing increases in the price of rent, the story in each region is more nuanced. Tay Letting operates in Glasgow, Edinburgh and Tayside so we have a full understanding of trends, challenges and the reality of the market in these locations.
Glasgow
In Scotland’s largest city, rent prices have reached new highs, up 16% year on year to hit an average monthly price of £972. Properties with 3 or 4 bedrooms have seen increases above the 16% average.
Private rental properties are still at stock levels significantly lower than before the pandemic. While time to let periods have increased slightly and are now sitting at 13 days on average, although for one bedroom flats this is lower at just 10 days which is marginally better than Q4 2021.
Letting agents in Glasgow have seen landlords leave the market, however landlords who have held steady have benefited from the increasing rent prices. This has helped attract new interest and investment into Glasgow’s private rental sector which will hopefully increase supply over the long term.
While higher average rental incomes are good news, landlords should remain conscious of the ongoing cost of living crisis, which analysts say will get worse before it gets better.
Edinburgh
In the nation’s capital, supply has continued to trail behind demand. This imbalance has put pressure on rent prices, with unprecedented increases of 14.2% year on year. Average rent prices now sit at £1,214 per month. Although the average time to let remains higher than Glasgow, at 16 days, this is still exceptionally low.
As Edinburgh’s universities and colleges returned to in-person teaching, seasonal demand for larger properties skyrocketed. Fuelled by students seeking term-time accommodation, 4 bedroom properties experienced soaring rent increases of 26%. This represents a significant recovery from the subdued market of earlier in the pandemic. Demand has well and truly caught up with historic oversupply.
Landlords can expect multiple applications for property listings putting pressure on renters to act quickly. However, the situation is unlikely to change in the near future as landlords remain hesitant to invest further into the Edinburgh private rental sector while they await the outcome of the Scottish Government’s proposals for the sector.
In February, Edinburgh City Council agreed to implement short term let controls to clamp down on AirBnB-style property listings. These properties don’t follow the same levels of regulation seen in the private rental sector and were the cause of much controversy for locals. We’ve been contacted by numerous landlords looking to explore moving from short term lets to the longer term private rental sector which may temporarily expand the supply of housing stock.
Dundee
Dundee also experienced strong growth in Q1 2022, with rent prices increasing by a not-so-modest 12.5% averaging £722 per month, now just £1 behind Aberdeen’s average. Unlike Edinburgh and Glasgow, Dundee has a higher percentage of 3 bedroom properties, accounting for 14% of the current housing stock. These 3-bed properties saw an increase in average rents of just 1.2% year on year, well below the average.
Dundee has one of the highest populations of students of any city in Europe, so it’s understandable why landlords see them as an important part of the local market. Demand from students started strong with most properties having a let agreement in place before the academic year began.
While demand has been less intense than the bigger cities, landlords can still expect multiple applications for sought-after properties. Rental incomes too, while more affordable for renters, continue to incentivise landlords and promote investment in the city’s private rented sector.
