Rents to continue to rise as supply of new property drops again

The continued reduction of new rented property across Scotland could see rents increase 15% by 2023, according to a survey by the Royal Institution of Chartered Surveyors (RICS).

A net balance of 10% more survey respondents said the number of new properties coming on to the Scottish market in the lettings sector has fallen rather than increased in the three months ending July 2018.

This is the tenth consecutive quarter in which this indicator has recorded a negative number in Scotland.

RICS said the drop in landlord instructions is resulting in smaller scale landlords exiting the sector and blamed the shift in the Buy to Let market in the wake of tax changes which are still in the process of being implemented.

The number of tenants looking for a new home in Scotland increased during Q2 2018, with a net balance of 27% more chartered surveyors reporting a rise in tenant demand.

One consequence of this imbalance is that expectations for rising rents for consumers, appear to be strengthening again, RICS added.

Simon Rubinsohn, RICS chief economist, said: “The impact of recent and ongoing tax changes is clearly having a material impact on the Buy to Let sector as intended. The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the Build to Rent programme or government funded social housing.

“At the present time, there is little evidence that either is likely to make up the shortfall. This augers ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”

Tags: RICS

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