Strong rents, high demand and recovery in the sales market are all positives, but the lack of supply is a cause for serious concern.
Increased demand, higher rents, lower void times and better returns have long been the story in the Scottish rental market, and this year it looks to be no different – with the ban on tenancy fees possibly contributing to another bump in rent levels across the country.
2-bed flats (the most prevalent property size) are more expensive this year than last in Edinburgh, Glasgow, Aberdeen, Dundee, Stirling and Inverness; Inverness is leading the charge with an increase of an impressive 7.1%. The length of time which a property spends advertised online before being let is also dropping in Scotland’s key cities for letting, with a stunning drop of 15 days in Aberdeen meaning that flats now let in half the time that they did last year.
But there is a flipside to this increased demand and without a steady supply of property to meet the needs of all the tenants in the market, problems could lie in wait for Scottish renters. The picture for every Scottish city is the same: the six key Scottish cities mentioned above have collectively seen 31.04% more properties let in September than brought to the market. In August the figure was 12.65%, and whilst we can expect to see new flats overtake those let again in October, the drop in available property has been alarming.
Steve Tigar, the Managing Director of Lettingweb, says, ‘Contrary to popular belief, the rise of the rental sector in recent years was not in fact driven solely by problems in the private sales market. Instead, it has been growing since house prices started increasing rapidly in the mid-2000s, forcing people into rented housing. The credit crunch further exacerbated that situation but it also meant that people ended up renting out their houses instead of selling them, giving more supply to meet the growing demand.’
‘That was a delicate situation,’ he adds. ‘And the recent recovery in sales may throw it off balance. A lack of new housing being built puts further pressure on supply in the rental sector, and rather than relieving the problem, rising house prices may cause real problems for anyone looking for flats in Scotland. Now more than ever, renters in Glasgow and the rest of the country need investors and landlords to step up.”
For full insight into the lettings market across Scotland, download Lettingweb’s Lettingstats Report – October Edition here.