What was the Scottish rental market like in Q4 2022?
Stock levels low and increased costs for landlords and tenants
The latest report from Citylets presents a challenging period for the private rental market in the fourth quarter of 2022, with rising interest rates and rent freezes affecting landlords.
Rents for new tenancies in Scotland rose an unprecedented 11.9% year-on-year after the Scottish Government’s Cost of Living (Tenant Protection) (Scotland) Bill 2022, introducing generalised bans on evictions and rent rises within pre-existing tenancies. The legislation has been extended until 30th September 2023, with the option for a further six months extension still on the table.
However, the rent cap will rise from 1st April 2023 – landlords will be able to increase in-tenancy rents by up to 3% (in the initial bill, this was set at 0%), which could lead to some relief for landlords.
Citylets said it is “unclear whether levels of rental stock placed on the market will outweigh demand” in Q4 as was seen in economic downturns in the past.
It is hard to predict the long-term impact of the above on Scotland’s private rental sector with many would-be buyers postponing property purchases and tenants staying in properties longer as new tenancy rents are preventing them from moving.
Average Scottish rents rose 11.9% annually to £972 during this quarter, while the average time to let was 16 days – one day slower than the same time last year.
One-bedroom flats, with an average rent of £703, were the quickest to let across Scotland, with an average time to let of 13 days (three days faster year-on-year), and 45% of these properties being let within one week. However, demand was also high for two-bedroom flats which experienced the biggest year-on-year rental increase, with average rents for this property type rising 12.7% to £924.
If we compare Scotland’s largest cities, there was intense competition for property to rent in Edinburgh and Glasgow with average time to lets (TTLs) of 12 and 13 days respectively.
Edinburgh's average rental rate rose 14.9% to £1,370 per month. Glasgow’s rental rate averaged at £1,111, up 13.9% year-on-year.
The Edinburgh rental market
Average rent in Edinburgh
According to the Citylets report, Edinburgh’s rental rates grew by 14.9% during the fourth quarter of 2022, taking the average rent to £1,370 per month. Incredible demand saw rental rates pushed up across the city, intensified by a severe lack of available properties, but the latter end of the quarter has seen a slowdown in tenant inquiries – a trend not seen since 2019.
Four-bedroom properties saw the most substantial growth. This exceptional demand led to a 20.9% annual increase, driving the average rental rate for this property type to £2,590. This means that Edinburgh’s four-bedroom properties have seen a 73.1% increase in rental rates over the past decade, a strong result for long-term property investors.
In fact, all property types (from one- to four-beds) saw growth of over 67% across the past decade, demonstrating how strong an investment the Edinburgh rental market can be for those willing to pursue a longer-term venture.
Time to let in Edinburgh
The average time to let for Edinburgh property remained at 12 days during the fourth quarter of 2022.
One-bedroom properties in Edinburgh let the fastest, in 10 days on average (no change from the previous year). A total of 57% of one-beds let within a week of being advertised, and 94% were let within one month.
Best rental yields in Edinburgh
Combining Citylets and ESPC data, we can reveal that one-bed flats in EH9 produced the best rental yield in the Edinburgh marketplace, at 7.5%. Two-bedroom properties in EH12 also performed well, with a rental yield of 6.8%.
Nicky Lloyd, Head of ESPC Lettings, said: “The last quarter of 2022 has been a difficult period for the private rental market with rising interest rates, the rent freeze and the cost-of-living crisis all affecting the market.
“There are low stock levels in Edinburgh, potentially due to tenants staying in properties for longer, but the demand for homes remains strong with rents staying at the same level or sometimes higher than the previous rent achieved.
“One-bedroom properties in EH9, covering Newington, Marchmont and The Meadows, generated strong rental yields during this time. Two-bedroom properties in EH12, which covers Corstorphine and Murrayfield, are also a great investment, with this postcode being popular with students, young professionals and families looking for a home close to good schools and green spaces – plus it offers excellent local amenities and first-rate transport links.
“If you need advice on the Scottish Government’s new legislation, reach out to ESPC Lettings and we will be happy to help.”
Get in touch with Nicky to discuss the Edinburgh rental market.
Search houses and flats for sale in Edinburgh.
The Glasgow rental market
Average rent in Glasgow
According to Citylets data, the average rent for property in Glasgow increased by 13.9% to £1,111.
Two-bedroom properties saw the biggest increase in average rents, taking the new figure to £1,154 per month (17.4% higher annually).
One, two and three-bed properties saw a solid growth in their rental rates over the past year, of at least 3%. One-bed properties had the second highest increase in average rents, coming in at 11.1% higher annually at £820. However, four-bed properties saw an 8.8% decline in the average rent.
Time to let in Glasgow
In the fourth quarter of 2022, Glasgow’s average time to let dropped to 13 days – four days faster than we saw in 2021.
One-bedroom properties let the fastest, in just 10 days (three days faster annually), showing just how competitive the private rental market is in the city. A total of 51% of one-beds let within a week, and 94% were let within a month of coming onto the market.
Search houses and flats for sale in Glasgow.
The West Lothian rental market
Average rent in West Lothian
West Lothian has become increasingly popular in recent months thanks to buyers seeking larger, more affordable homes within easy reach of the Capital.
Rental rates across the region rose 9%, taking the new average rent to £838 a month.
Three-bedroom properties were the most popular, with rents rising 14.8% year-on-year to an average of £954.
Time to let in West Lothian
The average time to let in West Lothian reduced by five days year-on-year, meaning properties were let within 18 days on average.
West Lothian’s two-bedroom properties let the fastest, with an average time to let of 17 days.
Search houses and flats for sale in West Lothian.
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ESPC Lettings
If you’re interested in entering the buy-to-let market or are a landlord looking for advice, ESPC Lettings can help. As a letting agent based in Edinburgh, we can assist with all stages of renting out a home, from finding the right property to sourcing tenants to property maintenance.
Get in touch with the team today on landlord@espc.com or 0131 253 2847.