Political and financial uncertainty, and the lifting of the rent rise cap and eviction ban, have all played out in Edinburgh’s private rented property market over the past few months. However, the story remains the same - demand significantly outstrips supply and rents continue to rise.
Whereas other Scottish cities such as Glasgow saw a fall in average rents in the third quarter of 2024, Edinburgh’s average rose once again, albeit at a slower rate than the same period in 2023.
According to the latest Citilets Quarterly Report, the market in Scotland is starting to stabilise but Edinburgh continues to move to its own drumbeat to a certain extent.
Housing (Scotland) Bill
It remains to be seen whether the change of government in Whitehall and the Housing (Scotland) Bill that’s currently passing through the Scottish Parliament will have a significant impact on the capital city’s private rented market.
Further consultation is expected in early 2025 on the Bill’s new Rent Control Areas (RCAs) and how rents will be capped. Housing Minister Paul McLennan recently announced amendments to the proposals to provide more clarity on the cap, which will be set at the Consumer Price Index (CPI) plus 1%, up to a maximum of 6%.
The Bill should receive Royal Assent next summer but is unlikely to come into force until 2027/8. Proposed new rules around pets and tenants’ rights to personalise their properties are likely to take longer due to the secondary legislation that’s required.
Lack Of New Properties in Edinburgh
Despite Edinburgh’s flourishing property rental sector, coupled with restrictions on the type of homes that can be rented out on a short-term basis, few new properties are coming onto the long-term market. New investors have been slow to take advantage of the lifting of the rent rise cap, and holiday let landlords have failed to move across to long-term letting in their droves as predicted.
The fall in mortgage rates since their peak last year also seems to have done little to tempt new investors, who are perhaps put off by the 6% additional dwelling tax that’s levied on properties bought to rent out.
The double Council Tax charge for second properties that came into force on 1 April 2024 may also be discouraging investors from buying a rental property.
Of all Scotland’s cities, Edinburgh is the most attractive proposition for property investment due to its position as one of the world’s most desirable places to live. But the problem of demand outstripping supply endures and shows no sign of abating any time soon.
Rents Rising More Slowly
The latest Citilets figures show another increase in average rents in the capital, rising to £1,598 a month from £1,574 in Q3. The year-on-year increase has certainly slowed, with just a £52 rise (3.4%) since Q3 2023 but this is against a year-on-year fall of 0.5% in Glasgow and a more modest rise of 1.5% in Dundee.
This time last year, 94% of one-bedroom flats were being let within a month, highlighting the huge demand for this type of property. Twelve months later, we saw a slight fall but 89% of one-bedroom properties were still being snapped up within 30 days. Overall, demand remains strong across all property types and Edinburgh’s private rental market continues to flourish.
For advice and information about investing in Edinburgh’s property rental market or letting your home, schedule a call with our Business Development Manager.