Rents reach record high as demand for urban homes reignites
A resurgence in demand for urban homes across Scotland has pushed rents to record highs, according to the latest report from letting specialist Citylets.
The quarterly report from the letting specialist shows prices for rental properties in Edinburgh, Glasgow, Dundee and Aberdeen have all increased significantly – while demand continues to outstrip supply.
Nationally the average monthly rent in Scotland increased 8.5% year on year (YOY) to £896, with the average time to let (TTL) for properties standing at just 20 days. More than a third of all properties (35%) were let within a week, while 77% were let within a month.
In Edinburgh average property rents rose more than 14% YOY, reaching an all time high of £1214 per month, while Glasgow recorded a 16% annual increase in average monthly rents, to £972.
Thomas Ashdown, managing director of Citylets, attributes the increase to the return to the office and the appeal of city living.
He said: “City living is back. During the pandemic growth slowed in most cities and accelerated in surrounding areas. Now people are back to office working, at least at some level, and seem confident there won’t be any more full lockdowns. The appeal of the city lights appears to have endured some extreme disruptions it would seem.”
However, he pointed out that letting agents remain concerned about the supply of available properties in the private rental sector, with many landlords continuing to sell up while the market is buoyant – or to avoid the threat of increased regulation and the costs that will bring.
Mr Ashdown added: “It’s reassuring to see that cities are coming back to life, however rent rises of this order are likely to prove problematic for many, given the ongoing cost of living crisis. This is not a discretionary purchase – you have got to have somewhere to call home. More choice in the sector and indeed more widely in housing would, of course, help.”
The Citylets report for the first three months of 2022 shows demand for rental properties across Scotland exceeded supply in both rural and urban areas. However, the number of available homes and flats was slightly higher than the historic lows reported in the last quarter of 2021.
Mr Ashdown said: “Despite relentless economic worry and the conflict in Ukraine that will further impact on the cost of living, the market is very busy. People want to get on with life and make decisions now which may have been postponed in recent months.
“While there is slightly more supply of properties than there was at the end of last year, it’s not a widespread phenomenon and this is not something that can always be addressed quickly. The consequence is, with no sign of demand reducing, rents may continue to rise throughout 2022.”
Karen Turner of property specialists Rettie & Co, said: “With the notice periods reverting back to pre-Covid, there are some landlords who are now looking to sell and exit the market, which will only add to the supply/demand challenges we are facing.
“We should be encouraging more landlords to enter the sector to meet this demand, not discouraging them.”
The extensive report also highlights that the bigger the property, the bigger the annual price rise, evident in the Scotland-wide figures as well as the individual city and region figures.
Wendy Gallagher, of Glasgow’s One Stop Properties noted that “unprecedented increases in rents” have been of benefit to the company’s existing landlords, but added: “We need to be considerate of the impact of the rising cost of living for tenants.”
Charlie Inness, of Edinburgh letting agent Glenham Property said: “We do not expect the shortage of supply to change as investors are either exiting the market or are cautious of entering due to the uncertainty created by the Scottish Government’s proposals for increasing regulation and artificial control of the sector.”
Chris Minchin, of Winchesters Lettings in Aberdeen also commented on the worrying stock levels and added: “Aberdeen remains significantly under-provisioned for three bedroom+ houses for families in most areas of the city and outlying areas, with prices here increasing significantly.”
Dundee in particular has experienced unprecedented growth in the first quarter of 2022, with now only a £1 difference in its average monthly rent from that of Aberdeen.