There is little doubt that rents are rising across Scotland. Despite several years of restrictions imposed by the Scottish Government (SG) rising costs across the economy have put pressure on landlords and through them, their tenants.

These increases are not uniform across Scotland, as you would expect, with some active hot-spots and other areas where rents remain relatively flat.

With the end of rent restrictions in Scotland earlier this year and an overall improvement in the buy-to-let economy, how is the market in Scotland reacting?

With decades of experience in the buy-to-let property market, we’re going to look at what’s happening, and ask where are rents rising fastest in Scotland.

Are rents rising?

We appreciate that this seems like an odd question, given that we’ve just asserted that rents are indeed rising, but it’s important to be clear what we’re talking about.

CityLets most recent quarterly report would indicate that there is an demonstrable increase in rents in Scotland:

These figures show an overall rise in Scottish rents, with Edinburgh and Dundee performing better than the other major population centres. It’s important to note that CityLets’ figures only reflect properties which are on the market.

This may seem obvious, however at any given point, the majority of rental properties are not on the market, they’re occupied and thereby not available. Accordingly, that portion of the private rented sector is not reported in these numbers.

Like all figures therefore, these are a snapshot of the available market at a point in time and should be treated as such.

We’ll look in more detail at each of these areas, making additional use of ONS market data.

Rent in the Scottish private rented sector

The ESPC, basing their finding on CityLets review, made the following observations:

Quarter 2 saw an average rent increase of 11.7%. This gives an average monthly rent of £1,207. Despite this Glasgow and Edinburgh both recorded single-digit rises – 3.7% and 6.6% respectively.

In Q1, single bedroom properties saw a 14.3% increase year-on-year resulting in an average rent which had risen to £841 per calendar month.

Three-bedroomed properties demonstrated the greatest medium-term growth, returning a 51% rental increase over the past five years resulting in an average rent of £1,628 pcm.

As of the first of April 2024, the previous restrictions of rent increases no longer apply, no doubt a relief to landlords throughout Scotland, however the First Minister, John Swinney made mention of rent controlat the recent SNP conference.

As the linked article suggests, this may be directed at specific areas with specific issues which is broadly good news as rent control doesn’t have a flawless record when it comes to keeping rents affordable.

That however is for the future. At present we appear to be seeing an overall upswing in the profitability of the PRS and its attraction to investors, but it’s worth noting that rising costs elsewhere in the economy are soaking up quite a bit of those increases.

Edinburgh

Scotland’s capital has always been a solid performer in the property market, although that shouldn’t be taken to mean that returns exceed other areas of the country.

However, property prices are showing signs of plateauing, lenders are actively courting investors and like others in the sector we are seeing increased activity.

According to the Office for National Statistics (ONS), Lothian, which includes Edinburgh, is outperforming Scotland as of July 2024.

In Lothian, average rents on detached properties rose by 16.9%, while for terraced properties, the average increased by 13.3%.

The ONS also charted the market by bedroom, confirming the assertions made by the ESPC.

This translates to an average of £973 pcm for a one-bedroomed property and £1640 pcm for a three-bedroomed house.

Glasgow

As Scotland’s second city (a view erroneously held by those who don’t live there), property in Glasgow has also been performing well.

Despite what looks like a dramatic fall in rents, there was an increase in average rent to £1,187 up from £1,144, an increase of 3.8%.

Again, three-bedroom properties are performing well, with an average rent of £1,251 pcm.

Aberdeen

Aberdeen has enjoyed a solid increase in rent over the past year despite the uncertainties surrounding the fossil fuel market.

Average rents have risen by 8.6%, with terraced properties, a feature of older cities, rising by 6.1%.

Again, three-bedroom properties are showing solid rental growth with an 8.6% increase, however at an average of £933 pcm, the actual cost of renting in Aberdeen is still considerably lower than in the central belt of Scotland.

Dundee

Compared to July 2023, Dundee has demonstrated excellent growth with an average rental increase of 9.4%

Current average rent is now £817 compared with £747 in the same period in 2023.

One-bedroom properties are returning an average rent of £553 pcm, while three-bedroomed properties continue the trend of good performance at an average of £983 pcm.

Like Aberdeen, these figures seem restrained compared to Edinburgh and Glasgow, however the overall percentage increase is notable.

Advice from the property pros

There are disparities between CityLet’s figures and those from the ONS although those are likely due to methodologies. Citylets have the Scottish average at 11.7%, the ONS at 8.2%.

Leaving the minor differences aside, it’s clear that many parts of Scotland are seeing increases in rent, some of them substantial.

With a Scotland-wide average rise of 8.2% there are some interesting regional variations, if we look away from the major population centres. West Lothian is 

showing a rent rise of 11.3%.

Ayrshire is seeing rents rising, year-on-year at 12.8% while Renfrewshire is turning in a respectable 9.4% increase.

Turning back to the four cities, the ‘winner’ at present is actually Dundee with a 7.4% year-on-year increase in rents. Edinburgh and Aberdeen run it a close second, with Glasgow a little adrift.

We mentioned above that this doesn’t necessarily mean landlords are currently bulk-buying champagne and booking time abroad. Although inflation has fallen back from its 2022 figure, prices continue to rise.

Those rising prices affect both landlords and tenants; tenants dealing with the increased cost-of-living and landlords finding the costs associated with their investments rising year after year.

In summary…

So, the answer to ‘where are rents rising fastest in Scotland’ is Dundee! We don’t want to pat our own back too much but we did suggest the city represented a good investment back in 2022!

Granted, other cities are nipping at Dundee’s heels and the lead is narrow. It’s probably better to look at these figures in the round and take from them that the PRS in Scotland is showing continuing signs of recovery, improvement and growth.

This is our experience of the market at present, and it’s good to see. After some years of difficult conditions, the buy-to-let market is once again looking inviting to both new and existing investors.

If you’re looking for exciting opportunities and worthwhile returns, get in touch and we can discuss how to convert your ambitions to solid actions.

As always, thank you for reading!

Written by Ross MacDonald, Director of Sales & Cofounder of Portolio

Get in touch on 07388 361 564 or email to [email protected]