The most recent Scotland Buy-to-Let Index from Your Move indicates that there was a surprising end of year increase in Scottish rental growth.
Data from the report shows average residential rents north of the border rose by 0.4% in December-the highest monthly rent rise recorded since June. In addition, this was a more substantial rise than the 0.1% in November.
This increase brought the average monthly rent in Scotland to £548.
Annually, rental growth is also starting to show considerable rises. Year-on-year rental growth had been on the decline since June 2015, where they stood at 3.1%. December however marked an upturn in annual growth, with Scottish rents now on average 2.2% greater than one year ago, up from 1.4% in the twelve months to November.
‘On average, Scottish rents closed the year £12 higher per month than where they started,’ observed Brian Moran, lettings director at Your Move Scotland. He said, ‘that could stack up to a not inconsiderable £144 extra for some tenants over a twelve month contract. As we enter 2016, it’s encouraging news that the majority of Scottish tenants can afford higher rents-and that arrears have dropped for the second month in a row in December.’
Scottish rents rise in December
Moran feels that, ‘Scottish rent rises have been ignited again recently by the improvement in wages and the gains made in the jobs market, while the supply shortage continues to fan the flames. Outside of the summer months, the New Year often sees the second biggest cycle of new tenancies and ushers in a busy time for the lettings market.’
‘It’s the period where people typically take up fresh career opportunities and implement new life changes-and this wave is already evident in the uptick of rents over November and December, as savvy tenants act quickly to beat the January rush,’ he continued.
Concluding, Moran noted that, ‘as the year progresses, other artificial factors will come into play. The Scottish Government decision to agree with George Osborne’s extra 3% of duty on the purchase of second homes is likely to distort the natural flow of the market, with any further buy-to-let investment likely to be front-loaded into the early months of the year. Once that deadline passes and if investment into the private rented sector becomes more hesitant, tenants’ rents may become much more exposed to the problem of supply.’