Strong demand – high rent inflation.
In Scotland, twelve of our local councils have declared a housing emergency, that is being felt at its harshest in the rental sector where tenants struggle to find properties to rent. Demand across Edinburgh and Glasgow far exceeds supply, leading to continual rent inflation, and minimal down-time between tenancies. It is an entirely landlord-led market across our two major cities.
Price Growth.
Price Inflation 2014 - 2024.
Edinburgh Rent Inflation | +85% |
Edinburgh House Price inflation | +50% |
Glasgow Rent Inflation | +88% |
Glasgow House Price Inflation | +39% |
Source: © Crown Copyright, Registers of Scotland, Rightmove, Rettie Research
Time to Let (Days).
Edinburgh | Glasgow | |
2014 | 28 days | 32 days |
2024 | 20 days | 25 days |
Source: Citylets and Rettie Research
Obtaining vacant possession.
A great deal of anxiety still exists about the inability for a landlord to recover a property in Scotland, should the worst happen. This seems to have been caused by the emergency eviction ban during COVID. This myth needs expelled as the eviction ban has been removed. Landlords have the right to recover their properties if they need to sell or move back in, or if a tenant cannot pay the rent. Indeed, with evictions being enforced through the Scottish Housing & Property Chamber rather than the courts, the process of recovering a property is simpler than in England. English cases join lengthy queues to progress through the court system.
Rent controls.
Rent controls are the single most controversial topic in the sector. They split opinion and have metaphorically split the Scottish market into pre & post covid tenancies. Landlords with long-standing tenants, could now be receiving rents of 30% to 40% below market value, but cannot increase their rent by more than 12% a year. During this post covid period, many Landlords have seen their mortgage rates double, or even triple, leaving them to supplement their mortgages each month. These landlords face a very tough decision, supplement the shortfall each month, or sell their property if they can no longer afford their mortgage payments. The latter decision will lead to further pressure on supply and then further rent inflation, potentialy forcingtenants to move out of their homes.
However; for new Landlords, entering the market now, it’s far more favourable. They do so at today’s inflated rents, with no prospect of dramatic rises in interest rates, and with the ability to increase rents annually by up to 12%. For these new landlords, this is all perfectly acceptable to them, with no sign of rental values doing anything other than rising.
Regulated letting agents.
Scottish Letting Agents are heavily regulated and have a legal obligation to service their landlord and tenant clients fairly, competently and with full transparency. Landlords south of the border have no such guarantees. A Scottish Letting Agent must comply with the Letting agent code of practice. This gives peace of mind to landlords and tenants, making the sector a far safer place for them to operate. Quite simply, if a letting agent in Scotland fails to comply with the code, which governs every aspect of their role, they can be fined, and landlords and tenants will be duly compensated. In contrast, the English rental sector is largely unregulated, beyond basic tenancy legislation. A savvy investor would always be wise to invest into a properly regulated sector, regardless of investment class.
In summary, there are numerous reasons why investing in Scotland could be argued as the safest property market to rely upon.
If you are considering being a Landlord, or if you already are and want a second opinion on what’s is best for your portfolio, reach out to our team.