Average rents for new tenancies in the private sector have seen a surge, marking the fourth consecutive quarter of double-digit increases. The escalating rental costs come on the heels of the implementation of rent controls, underlining the pressing need for further legislative attention.
Recent data released by lettings portal Citylets paints a worrisome picture of Scotland’s rental market. The introduction of rent controls, as part of the controversial Cost of Living (Tenant Protection) (Scotland) Act in 2022, has seemingly fuelled a steady rise in rent prices, prompting calls for additional regulations on the open market.
Although the current emergency legislation is set to expire on March 31, it is widely anticipated that more permanent, wide-reaching regulations will replace it. The new figures reveal that almost all major regions in Scotland experienced annual rent growth, with some areas witnessing increases of up to 19% during the third quarter of 2023.
Thomas Ashdown, the managing director of Citylets, commented on the situation, stating, “It is evident from the latest [Scottish] government consultation that future policies for Scotland’s private rented sector will likely resemble the existing legislation, with further rent caps, now extending to the open market. Many argue that the current legislation has both accelerated and shaped forthcoming regulations.”
He continued, “While the sharp rise in open market rents may cause concern, it remains a fact that increasing the number of homes in the sector will naturally have the desired cooling effect. More available homes will lead to increased housing options at more affordable rents.”
Turning to the real estate market, Karen Turner of Rettie & Co shared her insights, saying, “Scotland’s two main cities are still grappling with the repercussions of a busy summer, with tenant demand significantly outstripping supply. The disparity between supply and demand remains substantial.”
She added, “The impending short-term let regulations have exacerbated this issue across Scotland. Many landlords are not returning to the private rented sector as initially hoped. Urgent action is needed from the Scottish Government to address the housing crisis across all sectors. Landlords, whether private or institutional, need encouragement, not barriers, to enter the market. Scotland is a beautiful country, and people want to live here, but they are finding it increasingly difficult.”
The average monthly rent for a property in Scotland surpassed £1,000 for the first time in the first quarter of 2023 and has since continued to rise. The average monthly rent now stands at £1,115, with the annual growth rate accelerating to 13.7%. As the rental market in Scotland remains dynamic and challenging, it calls for sustained attention and action to ensure fair and accessible housing for all.