Edinburgh Lettings Market Pushes Upwards Again

The second quarter of 2023 saw demand for rental properties in Edinburgh continue to surge as prospective tenants scramble to get the accommodation they want – resulting in an extremely busy period for the city’s leading letting agent Clan Gordon.

According to the latest Citylets report, 42 per cent of properties in the city were let within a week, and the average time to let was just 14 days. The average time to secure a rental for individuals seeking one-bedroom properties was an incredible nine days.

No reversal in property letting demand likely in short term

Heightened demand means rents are only going one way, and, as Clan Gordon Managing Director Jonathan Gordon explains, they are likely to continue to climb.

He said: “The second quarter of 2023 was incredibly busy for us, and demand for available properties just continues to grow, putting upward pressure on rents.

“There are a lot of factors at play here – limited supply, a growing population and different demographics moving into Edinburgh.  I don’t have a crystal ball, but it seems likely that rental rates will continue to grow in the short to medium term because of the scarcity of available properties and the fact that demand simply isn’t slowing.”

Two-bedroom rental properties show steepest rent climb in Edinburgh

The Citylets report shows rents for new tenancies leapt by double digits for the third quarter in a row.

The average Edinburgh rent is £1,477 per month – on average, rents in Edinburgh have risen by 80.6% in the last 10 years and 15.1% in the last 12 months. Two-bedroom properties experienced the largest increase in rental rates, with a significant rise of 17.4%, reaching an average of £1,362 per month.

Demand, therefore, continues to outstrip supply, despite new legislation governing short-term lets that promised to put more homes back in circulation. The overall supply currently falls around 20% short of demand.

Some landlords have leveraged their position to increase rental prices.  At Clan Gordon, we regularly review rents in line with market value to ensure they are fair and accurate.

Rent cap creates gap between new and current tenancies

The cap on rent increases for existing tenants means the gap is widening between current and new tenancies. While landlords can only increase existing tenants' rent by 3% (or 6% in certain circumstances), new tenancies have no limit beyond what the market will support. The rent cap will remain in place now until the end of March 2024.

It's important to note that different areas within Edinburgh have displayed varying levels of rental rate growth. For instance, neighbourhoods such as EH8 have shown favourable rental yields for flats at 6.8%.

For tenants, these rising rental rates require careful consideration when budgeting for accommodation. For landlords, it is essential to keep on top of market trends when it comes to setting rents – and this is where a letting agent, with their finger on the pulse of local activity, can best support you.

Property stock and supply-demand imbalance

For Q2 2023, the number of enquiries per advertised property averaged around 100, highlighting the scarcity and desirability of available rentals.

Prospective tenants need to move quickly and decisively to secure a desired property due to high demand and limited availability.

Monitoring all these factors and industry insights can provide invaluable guidance for prospective tenants and landlords. That’s where our team can help.

Clan Gordon has been providing property management for landlords in Edinburgh for around 15 years, and we currently look after more than 600 homes across the city.

If you would like to find out how you can enjoy award-winning, hassle-free property management with Edinburgh’s top letting agent, schedule a call with our team today.

Connect With Us On Social Media