Scottish rents rise at highest annual rate for five months
This is the fastest year-on-year increase in rents since November 2014 when the annual change stood at 2.2 per cent, the data shows.
Coming back from a winter dip, the pace of rent growth has increased solidly from 1.1 per cent in February and a 1.3 per cent annual rise in March.
As of last month, the average residential rent across Scotland stands at a record £539 per month, matching the peak set just five months before in November 2014.
While rent growth is quickening on an annual basis, in the month to April, average Scottish rents rose just 0.1 per cent.
The greatest year-on-year increase was recorded in the Glasgow & Clyde region, where average rents have shot up by £27 (5 per cent) since April 2014.
The East saw the second biggest annual rise in rental prices at 1.7 per cent and in the South of Scotland rents climbed a more modest 0.7 per cent in the past twelve months.
Edinburgh & the Lothian’s has witnessed the biggest fall in rent prices year-on-year, down 0.8 per cent in the twelve months to April 2015. In the Highlands & Islands, rents are now 0.6 per cent lower than in April 2014.
“Scottish rents have peaked at a new apex, as lethargic supply of rental homes fails to match up to towering demand for homes to let. After rental prices plateaued over the winter months, we’re seeing annual rent rises start to ascend again,” said Brian Moran, area lettings director at Your Move.
“Affordability in the private rented sector now rests on new housing becoming available to let, and more choice for tenants, to keep rents competitive and rent rises in check.
“Solid rent rises offer clear encouragement for those contemplating buy-to-let investment but fears of prohibitive rent controls and additional tenancy legislation in Scotland may be off-putting, which could choke off new supply of rented homes and drive up prices for tenants.”
Your Move said the level of rent arrears in Scotland increased to 9.2 per cent in April from 6.2 per cent last year.
Mr Moran said: “Household finances are a struggle for some in Scotland and a minority of tenants are still mired in the red.
“Renters are much more likely to be in a job than a year ago but when it comes to paying the rent on time, wages are critical too.
“Much headway has been made regarding the employment rate in Scotland but it’s time for earnings to experience the same growth.”
Landlords’ total annual returns doubled in the past year to 15.2 per cent — mainly as a result of accelerating house price growth before the new Land and Buildings Transaction Tax was introduced, according to Your Move.
The typical landlord in Scotland has seen a return, before any mortgage payments or maintenance costs, of £23,820 in the year to April 2015.
Mr Moran said: “It’s worth remembering that we’re experiencing some extraordinary behaviour in the Scottish housing market at the moment, which lies largely at the root of this.
“House prices in Scotland are currently rising twice as fast as those in the rest of England and Wales, as a result of a short-term shot of activity before the new transaction tax was enforced.
“Now we’re under the new regime, this momentum is likely to calm to more sustainable levels — so landlords should adjust their expectations accordingly.
“Long-term capital gains should always be a plus for all landlords, rather than something to take for granted.”