The gulf between supply and demand in Edinburgh’s private rented sector continues to bite, exacerbated by legislation that limits rent rises for existing tenants yet permits uncapped increases for new lets.
Properties coming onto the market are in shorter supply than ever, in part because tenants are staying put where their rents are protected, and new lets are being offered at record rates because demand is so high.
Rent Controls Could Be Expanded
The latest Citylets Quarterly Report for Q3 2023 paints a picture of uncertainty for the city’s landlords with the Cost of Living (Tenant Protection) (Scotland) Act further extended to 31 March 2024, capping annual rent rises at 3%.
The Scottish Government is now consulting on rented sector reform proposals that include rent control and eviction protection in the private rented sector. These are both features of the current act that was introduced as a short-term measure to offer support during the cost-of-living crisis.
The proposals include wider rent controls limiting increases for both existing and new tenants in areas where they are deemed necessary to stabilise the local market. Rent increases would also be limited to once every 12 months for a property, even if the tenants change several times.
Supply Issues And Price Rises for Edinburgh
Current legislation has done little to slow the rise in rents in Edinburgh, with the average cost of a two-bedroom flat almost doubling in the past 10 years to £1,451 a month. According to the Citylets Report, 88% of all properties in the city are let within a month, highlighting the huge demand that now consistently outstrips supply and shows no sign of abating.
For letting agents, it's a challenging situation. Clan Gordon Managing Director Jonathan Gordon recently took five people to view a property and admitted it brought the desperation of the rental market into sharp focus.
“I met five wonderful individuals at a one-bedroom flat in Leith. This encounter, however, painted a poignant picture of the challenging housing situation many currently face. Despite each of them holding stable jobs, I found myself in the tough position of not being able to help every one of them.
“With over 300 other interested parties waiting to view the same flat, it’s clear the demand in Edinburgh is overwhelming with no end in sight to the relentless widening of the gap between demand and supply,” he said.
Edinburgh Rents Top The Table
The report shows that Edinburgh is home to the most expensive rental properties in the whole of Scotland, with the EH3 postcode that takes in Inverleith, Warriston, Tollcross, Fountainbridge and Canonmills topping the chart.
Only St Andrews comes close, with two-bedroom properties costing an average of £1,468 a month compared to £1,762 in EH3.
The average rent in Edinburgh across all property types is now a record £1,546, an increase of 88.5% since 2013, and one-bedroom flats currently take an average of just 10 days to let. Competition is high, which has a huge impact on affordability in the city as the undersupply drives up prices. The situation offers less opportunity for people to secure tenancies and puts pressure on them to make snap decisions without the usual research due to the lack of availability in the housing market.
Will Limits On Short-term Lets in Edinburgh Help?
It’s not yet clear whether Edinburgh’s new licensing scheme for short-term lets will have an impact on stock levels in the long-term lettings market. Many homes that have traditionally been used as holidays and Airbnb lets are now deemed unsuitable under new rules that came into effect on 1 October.
Those with shared entrances and stairways, such as flats in Edinburgh’s many tenement blocks, are unlikely to be granted licences in a move to limit noise problems and antisocial behaviour in the rental sector. However, it remains to be seen if those landlords will switch to long-term letting in droves, flooding the market with more properties.
The regulations will impact the number of rentals available to visitors attending the city's many festivals and events - although temporary licences are available.
Ask The Edinburgh Property Letting Experts
Whether you’re looking for a property to rent in the city or are a landlord who needs help managing their Edinburgh buy-to-let, Clan Gordon has almost 20 years’ experience in the local property market, and our team can offer expert guidance and advice.
If you're a landlord, we can guide you through the latest regulations and provide a full property management service to make letting your property stress-free. For prospective tenants, we can advise on the best area to live and help you make the right choice to suit your budget and priorities.
If you’re an investor looking for guidance on property investment in Edinburgh, our team will be happy to share their market knowledge with you to identify great properties to invest in.
Schedule a call with one of our professional property management advisors to find out more.