Member Article

Scotland’s tenants move back into the black

Scottish tenants are paying off late rent, amid improving household finances, according to the latest Scotland Buy-to-Let Index from Your Move, one of Scotland’s largest lettings agent networks.

As of January the proportion of late rent has fallen to represent 11.1% of all rent due in the month.

This is an improvement on 11.4% seen in December – and represents the lowest level of late rent in Scotland seen since July 2015.

Previously, arrears surged over the autumn to reach a record high of 13.8% in October 2015, before beginning to improve. Tenant’s finances remain in worse shape than twelve months ago, when in January 2015 as little as 7.1% of all rent due was late.

However the change in direction is now clear – in the third consecutive month-on-month drop in Scottish tenant arrears.

Brian Moran, lettings director at Your Move Scotland, comments: “With a record number of Scots in work by the end of 2015, there finally seems to be some momentum pushing down the frequency of late rent payments. Over the course of last year we saw a considerable increase in the proportion of tenants unable to keep pace with their bills, but tenants appear to be over the hump – putting us on a much firmer footing for 2016. With Christmas now firmly behind us and employment levels beginning to take off, many tenants are feeling much more in control of their incomes, and this is a very positive start to 2016.

“But we’re not on the home straight just yet. The Scottish unemployment rate is still above UK levels, and parts of Scotland are also on the frontline of the current oil price slump. Wider economic factors will be decisive in determining whether tenant arrears continue in this downward direction.”

Rent rises dominated by Edinburgh & Lothians

In January 2016, rents in Edinburgh & the Lothians were 6.4% (or £38) higher than a year ago – the fastest annual rent rise on record. This is nearly three times quicker than average rent growth across the whole of Scotland.

On average, across Scotland as a whole rents climbed 2.3% in the twelve months to January 2016, equal to £12 in absolute terms. This is only slightly faster than 2.2% in the twelve months from December, though represents an annual acceleration compared to the 1.3% annual lift recorded in January 2015.

As of January 2016, the average residential rent in Scotland now stands at £548 per month, just £1 shy of the historic record set in July 2015.

Rents across Scotland remain the same on a monthly basis as in December, steady at £548 per month.

Brian Moran continues: “In different parts of Scotland, powerful interplays between supply and demand are shaping the regional rent patterns that are emerging. In popular cities like Edinburgh – where the jobs market is hottest – the competition to find homes means tenants have to act quickly. As a result, we’re seeing exceptional rent growth in some parts of the country – while in others, lettings market activity is much calmer.

“However there’s also another ingredient added to the mix now. The private rented sector is in a state of uncertainty, as landlords wait with baited breath while the Private Tenancies Bill progresses through the Scottish Parliament. Nervous landlords may be acting now before their hands are tied, and they lose control of the rent they can charge. This could have prevented a seasonal dip between January and December instead of the steady picture we have seen.

“Encouragingly, the latest rent rises are underpinned by good news. We should also be looking at tenants’ bottom line. Arrears are falling – which speaks volumes for affordability right now. With rents below their price peak, many tenants have been seizing the opportunity to move out of season, while good deals are available.”

Please click here to read the full Your Move Scotland Buy-to-Let Report.

This was posted in Bdaily's Members' News section by Property Editor .