Edinburgh’s Rental Market Shows No Sign Of Slowing in 2024

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The run-up to Christmas typically sees a slowing of Edinburgh’s private rented property market but the final three months of 2023 proved an exception, with some strong figures for time to let and rental values in the city. 

The last Citylets quarterly report of the year showed that demand for homes of all sizes was still strong between October and December, with properties being rapidly turned around between lets.  

Big demand in Edinburgh for one-bedroom homes to let 

In Q4 one-bedroom properties were in high demand, with a 14% year-on-year rent rise and an average of 13 days to let. Indeed, 89% of all one-bedroom homes were snapped up within a month, some of which could be attributed to students returning to the city after the summer break and looking for accommodation. 

The average rent in Edinburgh was £1,503 a month in Q4, a year-on-year increase of almost 10% and a whopping 83% higher than 10 years ago. 81% of all properties in the city were let within a month and the licensing change for landlords of short-term lets doesn’t yet seem to have impacted supply in the long-term let market. 

Tenement landlords predicted to switch from short-term to long-term lets 

Landlords whose properties weren’t deemed suitable as short-term lets, especially the many flats in Edinburgh’s tenement blocks, were predicted to switch to long-term letting once the new rules came into force.  

All short-term let operators had to apply for a licence by 1 October 2023, but holding a licence won’t be a legal requirement until 1 January 2025, so it might be that more properties will gradually move across to the long-term let market as licences are processed and refused.  

However, judicial reviews over the legality of these new short-term let policies are still ongoing. In December, Edinburgh’s control area for short-term lets was deemed “not only unfair but illogical” by the Court of Session. 

Rent Rises Return 

The end of the Cost Of Living (Tenant Protection)(Scotland) Act, which was introduced in October 2022 to protect tenants during the cost-of-living crisis, means landlords will no longer be restricted to maximum 3% rent rises from 1 April, although only one increase can be made in a 12-month period. Evictions that were paused during this period can also be actioned. 

The end of the cap on increases will enable landlords to align rents with current market rates, but tenants can appeal to the rent officer if they don’t agree, who must then apply the tapering formula. If the gap between the current and market rent is 6% or less, then the landlord can make the increase, if the new rent doesn’t exceed the market rent. 

Any higher increases will be subject to the formula, which dictates that the highest possible increase can’t be more than 12% of the existing rent. Rent officers can’t set a rent higher than the landlord has requested. 

The end of the government’s cost-of-living protection could create movement in Edinburgh’s rental market, as tenants are no longer incentivised to remain in properties by protected rents.  

Year of change predicted for the private rental sector 

The results of a Scottish Government consultation with landlords and tenants over rented sector reform are expected during 2024, which could have further implications for Edinburgh’s privately rented properties. Issues on the table include rent control, rights to keep a pet, flexibility to personalise a home, ending joint tenancies, unclaimed tenancy deposits and greater protections during the eviction process.  

All in all, 2024 looks likely to be a year of change for the private rented sector. If you’re an Edinburgh landlord who needs advice or guidance on any of the above issues, arrange a call with one of our expert property management advisors.  

 

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