Blog: Edinburgh is the new Aberdeen of the private rental market
By Robert Nixon, head of residential letting, Speirs Gumley
For as long as I can remember, oil capital Aberdeen has been the most expensive city in Scotland to rent a home, with rents for all types of property notoriously high.
However, this year the Granite City’s reign has come to an end. Due to the downturn in the oil and gas industry, rents in Aberdeen are falling dramatically.
According to statistics gathered by LettingWeb, rents for a one-bedroom property in 2016 are down 14% on the 2015 average, with two-bedroom properties down 16 per cent.
Aberdeen’s crown as the best Scottish city for landlords to invest in has been stolen by thriving Edinburgh. Despite political and economic uncertainty, LettingWeb’s statistics so far for 2016 show that rents for both one and two-bedroom properties in the capital have risen by 5 per cent compared to the average for 2015, while three-bedroom properties have risen by 9 per cent.
Confidence in Edinburgh’s property market is one of the main reasons Speirs Gumley decided to open an office in the Capital in May this year. Like the rest of our business, our residential lettings service is currently enjoying substantial growth. Over the last 18 months alone, we have increased the number of new properties that we have taken on to manage by 56 percent and we expect this trend to continue, with growth of 20-30 per cent anticipated in the coming year.
We have been seeing a surge in business in our Glasgow office. A block of 20 high-end one and two bedroom apartments on Bath Street in the city centre was successfully let in the fastest time I can ever remember, and our client achieved much higher rents than they had originally anticipated. Gone are the days of rented accommodation being just for students, or those who only want to stay in one place for a short time. As the name suggests, ‘Generation Rent’ is now just as likely to rent a home as buy one, but they are no longer content with shabby décor or dampness – if they can’t buy a home of their own, they want their rented property to be well maintained, attractive or even luxurious.
As demand continues to exceed supply in Edinburgh, I expect rents to remain high for the foreseeable future and make the city a very attractive place for landlords to invest. In recent analysis by property crowdfunding firm Property Partner, Edinburgh came 5th in the UK and first in Scotland for university towns offering best returns for buy-to-let. Investors are looking for and seeing yield returns of 6 per cent and above in the capital.
The good news for tenants is that as landlords try to get the best possible rents for their properties, we’re seeing a trend of them spending more time and money on making their properties as appealing as possible, upgrading and refurbishing to achieve a higher quality product. The forthcoming Private Housing Tenancies (Scotland) Bill due to come into force in late 2017 will introduce rent controls, which will provide more predictable rents and protection for tenants against excessive rent increases. I completely agree that rents should always be increased fairly, and unfortunately there are some unscrupulous landlords out there. We would have no hesitation in telling our landlords if we felt they were charging tenants unfairly.
I only hope that rent controls don’t deter investment in the sector, which would reduce supply of rented properties in hotspots like Edinburgh even further.