Member Article

Scottish rents hit record as LBTT surcharge bites

Rents in Scotland are at a record high, after the fastest month-on-month growth on record, according to the latest Scotland Buy-to-Let Index from Your Move, one of Scotland’s largest lettings agent networks.

Average residential rents in Scotland have shot up 1.3% from April, after the cost of the new Land and Buildings Transaction Tax (LBTT) surcharge has pushed up prices in the market.

This increase means that the average rent in Scotland now stands at £549 per month. This is the highest Scottish rents have been ever been, surpassing the previous record set in July 2015.

This month also marks five years since the Scottish National Party gained an overall majority in the Holyrood. Since then, average rents have seen a 7.9% (£40) upswing from £509 per month in May 2011.

Brian Moran, lettings director at Your Move Scotland, comments: “Rents are rising rapidly as a result of the new Land and Building Transaction Tax surcharge for buy-to-let properties. This tax hike has dissuaded landlords from investing in the sector leading to a shortage of homes to rent, compared to the demand for housing. With the limited supply of rental properties, potential tenants have been forced to compete to secure homes, pushing up rents. The introduction of this anti-landlord legislation from Holyrood has ensured the cost of the policy has hit tenants hardest.

“Since the SNP came to power five years ago, monthly rents have increased by an average of £40. However, the rent control policy in the Scottish Government’s private tenancies bill will only treat the symptoms, not the cause of rising rents. By limiting the rent that can be charged on a property, becoming a landlord will become less appealing, limiting investment and forcing many to consider leaving the sector. This will lead to an even greater shortage of homes to rent. In addition, without the potential incentive of higher rents, landlords will lack the motivation and finance to improve the quality of their properties. The Government needs to look at incentivising landlords to increase the supply of rental properties in Scotland. With more homes available to rent, tenants wouldn’t need to compete for properties and rents would be more affordable”

Rents by region

On a monthly basis, rents rose across all of Scotland’s regions in May.

Glasgow & Clyde has seen the steepest uplift month-on month, with rents in the region increasing 1.9% from April. This amounts to a £11 jump in cash terms, with typical rents increasing from £538 in April, up to £549 in May.

The smallest monthly upswing in rents occurred in the Highlands & Islands. Rents in the region increased by just £1. With a smaller population and fewer high paying jobs than other parts of Scotland, competition for rental properties in the region has not been as fierce.

In the South of Scotland, the increase in rents was also marginal, with only a 0.2% uptick leaving typical rents to standing at £514 – the lowest average of any region.

Meanwhile, in Edinburgh & the Lothians, rents continued their upward trajectory, rising 1.7% (£11) from April, pushing the typical rent in the region to a record high of £662 per month.

The East of Scotland has seen rents increase by 1.7% (£9) month-on-month. This has raised the average rent in the region to £522 – the highest level since November 2015.

In the longer term, rents are only higher in two of Scotland’s regions year-on-year. In Edinburgh & the Lothians, rents have soared 11.6% (£69) year-on-year. This is the fastest growth on record powered by the growing proportion of higher paying jobs in the area, compared to the shortage of homes. The South of Scotland has also seen an increase in rents over the year, with a 0.9% upswing. Average rents in the region are £4 higher than May 2015.

Glasgow & the Clyde has seen the steepest decline in rents annually. Typical rents in the region have dropped 3.2% (£17) year-on-year.

Clickhere to read the full Your Move report.

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