Edinburgh and the Lothians have the highest rental incomes in Scotland, according to the latest Your Move Buy-to-Let Index
Good news for landlords – the average rent in Scotland has risen by 4.6% in the past year, with a typical property now let for £524 per calendar month.
That’s according to the latest Your Move Buy-to-Let Index, which shows that the rental market remains strong despite post-Brexit uncertainty, with landlords enjoying typical yields of 5.8% in Scotland.
Properties in Scotland attracted an average rent of £574 in the month of July – significantly higher than a year ago, Your Move found.
In July 2015 Scottish rental properties typically were worth £549 per month, meaning rents have increased by 4.6% in the last year. This yearly increase is particularly strong when compared with the 2.8% figure recorded in July 2015.
According to Your Move, this buoyancy suggests that UK’s decision to leave the European Union has had no negative effect on rents.
Brian Moran, lettings director, Your Move in Scotland, said: “Despite murmurings of uncertainty since the EU referendum, rents have remained strong in the period since the vote.”
“Demand for rental properties in all areas of Scotland has shown no sign of slowing down with rents rising by 4.6% in the past year.”
“Relatively low house purchase prices and higher rents in many areas make Scotland a popular place for property investment.”
“Gross rental yields of 5.8% in Scotland compare favourably with all areas of England and Wales.”
Edinburgh and Lothians home to highest rents
On a regional basis, the Edinburgh and Lothians area was home to the highest rents in Scotland. Properties in the capital and surrounding areas attracted rent of £639 in the month of July. This is 4.4% higher than the £611 recorded in the same month last year, although slightly down on April’s average rent of £651 – the high point of the year so far.
Prices in the Glasgow and Clyde area have been quickly catching up in the last 12 months. The average monthly rent in this area grew 11.7% in the past year, rising from £562 to £628.
The East of Scotland region saw much slower rental growth during the same period. Prices in this area now stand at £539 per calendar month after growing 1.5% since July 2015.
All areas of Scotland showed growth compared to the same point last year, something which suggests that the UK’s decision to exit the European Union has had limited impact on the rental market. Yields continue upward trend.
The average gross rental yield for properties in Scotland stood at 5.8% in July 2016, much higher than the figure recorded in previous years.
In both July 2014 and 2015 the average yield was 4%, this improvement is due to both higher rents and rising house prices in many areas of Scotland. The average property price in the nation stood at £143,282 during the month, Your Move found.
Average Scottish yields of 5.8% compare favourably with all regions of England and Wales. By comparison, the highest yields in England are to be found in the North East, where they reached 5.5% in July. In Wales the typical yield was 5.1% during the same month.
Tenant finances landscape
Across all areas of Scotland, 12.5% of tenancies had arrears of a day or more, slightly higher than the 11.1% recorded in June 2016, and above the level found in England and Wales for the same period (9%). On an absolute basis, the number of Scottish households in serious arrears – defined as two months or more – was 13,642 in July 2016.
Moran added: “Rents increased by 5.2% in the last year, suggesting the recent slowdown in rent rises may have come to an end.
“The UK’s vote to leave the European Union has not caused any immediate change in the rental market, although we must wait for longer term trends to develop.
“For landlords, market sentiment remains positive with the vast majority still looking to add to their portfolio of properties, despite the Brexit vote.
“The South East was home to the biggest leap in rents, with many Londoners moving further afield in an attempt to escape high rents in the capital.”