Response to Lettingstats Winter Report

17 Apr

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The Winter 2014/15 Lettingstats Report was published last Monday and received widespread publicity. It was cited in several newspapers including the Scotsman and Metro as well as being reported on Kingdom FM Radio. The analysis will be used in a forthcoming report by the Wall Street Journal.

Highlights from the Lettingstats Winter Report

Highlights from the Winter 2014/15 Report:

  • Uniquely detailed analysis of private rents and incomes across Scotland.
  • Rental affordability in Scotland is comparatively good to rest of UK.
  • If new regulations restrict supply this will change for the worse.
  • Even hot spots like Aberdeen have seen a dip in rentals this quarter.

Scotland has the most affordable housing anywhere in UK (Halifax 2012,13,14), and the lowest proportion of people in relative poverty after housing costs. While rents for new tenancies are up in most cities the rental market reflects supply weakness as well as local economic conditions and Aberdeen’s slight dip in 2-bed rents is evidence of this (-1.2% vs last year).

This report is slightly different to previous issues in that it includes a unique insight in to affordability (rent to income ratios). We have drilled down in to our enormous tenant survey of more than 6,400 tenants in Scotland to learn about actual rent to income levels within each of the main urban markets and have also mapped a year of rental properties in relation to estimated local income. Both sources demonstrate that the market sets rents based on supply and demand factors that are directly correlated to local income, local property prices, and local rents.

With supply of new housing in Scotland at such a low level we investigate the potential for institutional investment to fund the much heralded ‘build to rent’ sector. It is clear there is potential here but it is very sensitive to political risk, and the current debate re ‘rent controls’ is a real threat to that investment.

As social housing provision has declined, and the credit crunch has reduced owner occupation levels the private rented sector has been called on to do the heavy lifting in terms of housing provision in Scotland over the last decade. Not that it gets any thanks for it.  Despite the PRS market successfully expanding and adapting to meet this housing need, as well as coping with the numerous changes to the regulatory regime in that time, current legislative change threatens the sector’s ability to supply more of the homes that Scotland so desperately needs.

Responses to the Scottish Government’s second consultation closes on 10th May and we will be in touch in near future with details of how we intend to maximise the industry response.

 In the Press

“Rents fall in Aberdeen due to oil and gas downturn”

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Metro Article – 13 April 2015

The Scotsman, STV News and the Metro all ran articles off the back of the report focusing on how the downturn in the oil and gas sector had hit rents in Aberdeen, which saw rents for 2 bed flats fall by an average of 1.2% compared to last year.

The headline figures for year on year changes to advertised rents for 2-bed properties are as follows:

  • Glasgow £665 per month, up 6.5%
  • Edinburgh £784 per month, up 5.3%
  • Dundee £565 per month, up 3.6%
  • Aberdeen £972, down 1.2%

 

 

“House prices nationwide to outperform London”

The National” paper also used research from the report to highlight that UK house prices are set to outperform those in London for the first time in six years.

Wall Street Journal

The Wall Street Journal also picked up on the report and are planning on using the data in forthcoming report on Aberdeen.

About Letting Stats

Lettingstats produces the most comprehensive quarterly report about the private rental sector in Scotland giving a valuable insight into the market conditions, rent trends and likely yields. Lettingweb Members have access to the full version of this valuable report and are encouraged to pass it on (free of charge) to any landlords they represent.

If you would like to request a copy of the report, please email Dan Cookson.

For the latest updates, follow us on Twitter @lettingstats.