The latest data and analysis from Your Move Scotland has revealed that between April and May, landlords in Glasgow saw rents rise faster than anywhere else.
According to the data, prices in Glasgow and the Clyde increased by 1.9% month-on-month, well ahead of the 0.2% average across Scotland. On a yearly basis, prices in Scotland grew by 1.7%, buoyed by strong price growth in the Highlands and Islands. The average rent in the nation now stands at £582 (seasonally adjusted). On a non-seasonally adjusted basis the average rent was £589 in May.
Rents rose in most areas of Scotland during the month of May, Your Move Scotland found, as demand in the market increased. On a monthly basis it was the Glasgow and Clyde region which posted the strongest price rises, with average rents growing by 1.9% between April and May. This reversed a recent trend of falling rents in the city, leaving the average monthly rent standing at £597.
This put it ahead of the Highlands and Islands, where prices grew by 0.6% month-on-month to hit £692. The region has regained its title of most expensive place to rent in Scotland. This follows an average price rise of 3.8% in the last year, faster than anywhere else.
On an annual basis, four of the five regions surveyed saw prices rise. In the East of Scotland prices grew by 2.7% to reach £544 while in Edinburgh and Lothians annual growth of 1.9% left prices standing at £689.
The South was the only region to see prices fall, with the typical rental property now let for £542, 0.9% lower than a year ago. It remains the cheapest place to rent a property in the country.
On a national basis, the average Scottish rental price increased by 1.7% in the year to May and now stands at £582 per calendar month (seasonally adjusted). This figure is 0.2% higher than a month ago. On a non-seasonally adjusted basis the average rent was £589.
Encouraging signs for landlord returns
Landlords enjoyed strong returns once again this month, as yields remained at their highest level since November 2018, Your Move Scotland found. Yields increased from 4.6% to 4.7% in March, the first such rise for two years, and have now remained at that level for three successive months, into May.
This means investor returns continue to compare favourably to those found in England and Wales. The only two regions to offer returns higher than the Scottish average this month were the North East (5%) and the North West (4.8%).
Stability in tenant finances
The proportion of tenants in arrears was stable between April and May, Your Move Scotland found. This month 10.1% of all tenancies encountered some form of financial trouble, the same ratio as a month ago. Encouragingly this figure is much lower than the 10.7% recorded in March. On an absolute basis, the number of households in serious arrears - defined as two months or more - was 10,192 this month.
New regulation for landlords
New legislation surrounding energy performance certificates is due to come into force in just under a year. By 1st April 2020, any new tenancy will require the property to have an EPC rating of at least band E. By 31st March 2022, all rental properties will need to have an EPC rating of at least band E.
Your Move Scotland’s letting agents will be spending 2019 informing landlords of the upcoming changes so that they can begin any necessary preparations. Landlords who fail to comply will face fines of up to £4,000 if their property’s rating is not up to the new standard, so it is absolutely in their interest to start thinking about this now.
Brian Moran, Lettings Director, Your Move Scotland comments: “Although the property purchase market may have slowed in some areas, demand for rented homes continues to outstrip supply.
This was seen most strongly in the Highlands and Islands region, where prices have leapt in the past year. Scotland’s major cities of Edinburgh and Glasgow showed impressive monthly figures, demonstrating the enduring popularity of these areas. And with landlord returns remaining strong once again, May was a positive month for the Scottish rental market.”