Scottish letting agents give us their views on their local market.
“The local economy strengthening that we experienced in 2022 has continued in the first quarter of 2023. High end houses of three bedroom and above continue to outperform the rest of the market in terms of high rents. The negative rhetoric from Holyrood is having an acute effect on landlords, particularly the ones with one and two-bedroom properties. Due to the level of uncertainty, more landlords are leaving the sector. The end result is – a rather small stock of one and two-bedroom properties, which puts tenants in an undesirable position (with properties being snapped in incredibly short times), and an oversupply of one and two-bedroom properties in the sales market pushing pressure on the property values, which in Aberdeen have continuously fallen since 2015.”
“The rent freeze and eviction moratorium has now been in place since September with only a marginal change allowed, meaning that landlords will have restrictions in place for a full 12 months. When the proposals were announced, there were many predictions of a mass exodus from the lettings market, however, initial data is showing that has not been the case. The moves were brought in to deal with spiralling rents but this was a problem of lack of availability and whilst we’ve not seen people leaving en masse, we have also not seen new investment with Scottish Government ADS income down 15% in first two months of 2023. Tenant demand has followed usual seasonal patterns and we expect this to continue.”
“Q1 has followed the trend of the past three quarters of being exceptionally busy. Enquiries and viewings still continue to be the highest on record. An arrival of international students with their families for Jan/Feb intake has increased demand, with supply still low. This has meant that re-lets and new properties hitting the market are being let at a higher rent quickly, which will be welcome news for landlords who are seeing mortgage rates and other costs increasing. We anticipate another busy quarter ahead with students already trying to secure property for September and increasing oil and gas activity, but are finding more landlords looking to exit the market, which could cause further supply issues in the summer.”
“We have entered 2023 with a continuing increase in demand from those struggling to find affordable rental properties in line with the challenge in increased living costs. Whilst demand is on the rise, supply of affordable rentals cannot keep up. We are receiving endless enquiries following landlords selling, migrants new to the city, as well as those that cannot afford to get on to the property ladder due to increased mortgage rates and who have decided to continue renting. Due to the increasing rents and challenging living costs, we are seeing extremely high levels of interest on cheaper rentals and less so with the larger, more expensive properties. Along with this, in response to the student accommodation challenges last year, we are already seeing people anxious to secure accommodation before the summer competitiveness begins.”
“The market in Edinburgh continues to be dominated by constrained supply and very high demand resulting in further upward pressure on rents for new tenancies. The other cumulative effect is that tenants are finding it more and more difficult to find a home, as competition for any available stock is now at historically high levels for all types of properties within the PRS in the capital. We are experiencing multiple applications for any property listed for rent and time to let figures remain at extremely low levels as a result.”
“The market has kicked off the year with the typical post new year boost. There has been a lack of stock available, which has proved frustrating for potential tenants. The market up to £1500 rentals continues to be very active. The government legislative changes continue to cause landlords difficulties. It would appear that some landlords are leaving the market and it will be interesting to see what will happen in the coming year.”
“2023 will see 1000’s of people look to Scotland’s PRS for their accommodation needs. However, swaths are likely to be left disappointed as supply issues continue. In addition to landlords seeking to exit the sector, tenants staying longer in properties are contributing to the shortage. Historically when there have been less new properties entering the market, supply could be sustained by re-lets. But why should tenants move? Rents are capped at below market levels, financial instability has resulted in many deciding to ‘wait and see’ before leaping to property ownership, and the predictable unpredictability of the political landscape continues to damage confidence. It’s people who are looking for a home within the PRS who are suffering most. The PRS needs supply and government rhetoric must change to encourage investment in Scotland’s PRS and not drive investors away.”
“Tenant demand is picking up strongly as we head into spring. We are fielding more than the usual volume of enquiries from tenants looking to secure properties for the next academic year. We’re also getting a lot of enquiries from tenants who are having to move because their landlords are selling. Meanwhile, landlords who are re-letting their properties are willing to suffer longer than usual void periods to secure a higher rent, because they are aware that they cannot increase it by more than 3% per year after the tenancy starts.”
“Demand is far outstripping supply, creating chaos for the people seeking a rental property. Mindless intervention from the Scottish Government carries on demonising landlords and making it less attractive to be in the market, leading to major supply issues. Properties are therefore commanding higher and higher rents, at the expense of the tenants.”
“2023 has commenced at the same pace as 2022 ended. New listing rental values continue to rise in a high demand/low supply market, with landlords needing the increase to help offset higher ownership, taxation and regulation costs. Excessive government intervention in a free open market is generating the unwanted results predicted by the industry over several years. Student HMO ‘staying on’ intentions so far seem significantly higher than previous years. HMO rents are due to be higher too this year with 3-6% increases correcting Covid reduced levels, again in a very high demand market fuelled by total number of HMO’s reducing by c.30% in the city in recent years, all causing upward rent pressure. Only solution is more housing and the investment policies to encourage it.”
“The main topic of interest and relative excitement in the PRS recently has been permission of the lifting of the ban on rent increases with approx 86% of landlords in Scotland stating that they will be notifying their tenant of an impending increase on 1/4/23 (to take effect 1/7/23), just because they can! Even the 3% increase, though not ideal, is something and some landlords at least saw a glimmer of light at the end of the tunnel. Some landlords though have had enough and are exiting the market. Having said that, we are also seeing more investors entering the market through tenanted sales and we hope this will bring some welcome stability to the market.”
“We have seen demand in Q1 continue to rise, with viewings for properties still oversubscribed and the average time to let low. The cost of living crisis is likely to mean that more people have to rent for longer, so encouraging good landlords to stay or enter the letting market is key to keeping a strong supply of property and ensuring the quality and affordability on offer. It is hard for a tenant to find a rental property and with the current legislation in place not helping the matter. Demand remains high and we expect this to continue as we go further into 2023.”
“The continuing shortage of all types of PRS properties in Edinburgh is making finding a home very difficult for many tenants. Upward pressure on rents continued in Q1 due to limited supply and landlords maximising rent rises between tenancies to mitigate against the in-tenancy rent increase restrictions set by the Cost of Living Act. We saw reduced turnover of our existing stock as tenants chose to remain in properties with rents below market rent levels. We expect more movement once rent restrictions are lifted. Our focus has been on helping landlords with increased mortgage rates manage expenses and analysing the EPC ratings of our portfolio ahead of the minimum EPC requirements coming into force in 2025.”
“Rents are at record highs and time to let is as low as it has ever been. Demand is outstripping supply and I expect this to continue looking ahead to the rest of the year. It has been a good first quarter and quality stock is still becoming available to the market via natural turnover and client acquisition. Not sure this is the impact the government predicted, as their actions to freeze rents and ban evictions don’t seem to have affected our clients that much. That said, we welcome the rent increase capacity of 3% coming in April.”
“Q1 2023 has seen significant demand and a further lack of stock driving rental prices upwards, showing landlords that there is still an opportunity to add to their portfolios. Tenants are coming to the realisation that they can keep a lid on their rent by not moving home. As time passes, this will become a significant factor, with tenants looking to keep rent payments manageable. Landlords are seemingly concerned about their own cost of living and with the added pressure of the costs associated with their investment (rising mortgage interest rates, maintenance costs, etc.), some are questioning continuing within the PRS.”
“Heading into the spring, we are noticing an increase in demand for a range of letting properties within Glasgow and the surrounding areas. Whilst the market quietened down over the winter months, we are now seeing a huge influx in renters looking to move. As we approach our HMO season, we are noticing a lot of our current tenants are looking to stay in their current properties to avoid another potential crisis in student accommodation. Now that landlords can implement the 3% rent increase from the 1st April, we are working with tenants to ensure a suitable agreement is put in place and they can still afford to rent their properties.”
“The market has been unprecedented and it’s clear, in our opinion, that the growing housing crisis is exacerbated by government intervention. Receiving an average of 300 enquiries for every property marketed, it is clear there are not enough homes available and tenants are becoming increasingly desperate. In this market the most vulnerable will find it impossible to find a safe place to call home. As landlords experience increased costs, uncertainty caused by restrictions on rents and evictions, and high tax bills coupled with a buoyant sales market, it is no surprise that many are choosing to exit the PRS.”
“As predicted last quarter, regular increase in mortgage costs together with the rising cost of living, has forced the hand of many landlords, pushing them to leave the market. Many landlords are now having to financially contribute to their portfolio costs. For some, letting property is not the attractive investment that it once was. The reduced amount of available properties continues to put heightened pressure on the existing rental stock, a frustrating situation for prospective tenants. Our landlords feel that they have been penalised by the rent freeze. The 3% increase doesn’t match their increase in costs and it seems grossly unfair that social housing providers will be able to increase rents by up to 11%. We are going through uncertain times and this uncertainty has meant that the market has slowed somewhat. It’ll be interesting to see how Q2 unfolds.”
“Q1 started quite slowly but has steadily picked up to the point that those properties that are coming to market are snapped up in record time. New property is still filtering through, albeit more slowly than previous years, and landlords are increasingly interested in the standard of service they are receiving and obtaining advice that matches their own particular circumstances. This may be a presage to the industry moving toward a different kind of fee structure for agents, as a more tailored approach to clients looks like the way forward. Rents are very strong across the board but especially in the one and two bed category, irrespective of location.”
“Q1 has seen record demand for properties across all areas of Aberdeen and Aberdeenshire. Rents are recovering quickly from previous lows due to high tenant demand and government’s restrictions in the market. Supply is slowing due to ADS increases, further heightening demand. Aberdeen is seeing tenants from many groups, such as international and local students, professionals and executives, relocating due to work. Moving forward to next quarter, this will be dominated by the student changeover and further corporate moves in time for the new school years. Prediction – houses and 2 bed properties will be in high demand.”
“Q1 has looked a little different compared to the early part of previous years, in that we are seeing fewer tenants vacating compared to the norm. Unsurprisingly, the cost of living pressures are seeing more tenants stay in their homes, partly because their rent is protected by legislation from increasing above 3%, and partly because stock levels are so low that tenants have very little choice when searching for a new place to live. In contrast, those properties that are re-letting are seeing significant rent increases with massive demand from tenants searching, creating a competitive environment. The quality of tenants searching is also a notable change, with us seeing a slight increase in failed applications due to employment insecurity or adverse credit. A very unbalanced market, mostly created by punitive government legislation and a chronic undersupply of rental stock. We anticipate the spring/summer months to generate more activity, more tenant movement and therefore a freeing up of the market.”
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