The Edinburgh housing market is witnessing unprecedented levels of demand for rental accommodation and, most worryingly, an unprecedented shortage of supply.
Demand for one and two bedroom flats in any part of Edinburgh, priced below £1,500 per month, will generate unmanageable volumes of enquiries, often with hundreds of viewing requests being received for each property. It is quite possible to secure an offer on a property in this category within 24 hours of it coming to the market. The challenge for landlords and their agents is not securing offers, it’s the unpleasant task of managing the disappointment of the hundreds of young couples who have to be let down as they struggle to secure themselves a home.
Despite the huge increases in rental values witnessed over the last 18-months, mainly due to rising interest rates and increased ownership costs for landlords, the transaction tax imposed on new investors means there are virtually no buy-to-let landlords buying properties to rent.
The supply of new rental accommodation is coming almost entirely from ‘circumstantial landlords’. This term is used to describe existing property owners whose circumstances have changed, and they no longer need a property for their own or their family’s use. This class of landlord also now includes owners of properties formerly rented to tourists and business visitors for short term use. These landlords are having to switch to long-term renting due to forthcoming licensing legislation. Particularly in Edinburgh, over the coming year, this is likely to account for a significant increase in supply due to the current numbers of holiday let properties. Despite circumstantial landlords providing an invaluable supply of new properties, Edinburgh is still suffering from a critical shortage and urgently needs new investment from private and institutional investors.
Over the last 18 months, Edinburgh average rental values are up 23.9% and Glasgow are up 17%, based on data from citylets.co.uk. Based on data from the same source, the average time for a property to be listed on the market in Edinburgh is currently 14 days and in Glasgow 18 days.
Across Edinburgh, properties priced in excess of £1,500/month are also seeing strong levels of demand with budgets of up to £2,500 per month for furnished, city centre flats being commonly seen, and budgets of up to £3,500 per month for unfurnished, family houses with gardens also becoming increasingly common.