Tenants Hit As Rents At Record High

Scottish rents have reached an all-time high, pushing more tenants into arrears while landlords reap greater financial returns, a letting agent has found.

The average monthly rent in Scotland rose to £527 in November - up £12 on the same period last year (2.2%), according to Your Move's buy-to-let index.

The proportion of tenants in arrears rose to 6.6% - up from 6.3% in November 2013.

The total annual return for landlords on a typical rental property rose to 8.4% - up from 5.6% in the same period last year.

While tenants are paying out £6,324 a year - an annual rise of £144 - the average annual return for landlords now stands at £12,913.

This figure accounts for house price growth and vacant periods between tenants.

It does not include any mortgage payments or other deductions.

Christine Campbell, regional managing director of Your Move, said: Scottish rents have been steadily edging forwards and despite only taking baby steps, they reached a new pinnacle in November.

Demand and supply are still out of kilter and in highly sought-after employment and cultural nerve-centres like Edinburgh this overflowing competition for homes to let has topped up rent prices.

The outlook has shifted starkly from the start of this year and annual rent rises have been trimmed back to healthier levels as usual market forces check the rate of growth.

In real terms, average rents across Scotland are only 1.2% higher than they were a year ago.

Speculation over how future rental caps or more stringent letting controls may disorientate the stable direction rents are currently moving in and any off-piste spike in rents would hurt thousands of households who depend on private rented accommodation.

Renters rely on landlords too. Increased investment into the sector is the only way to alleviate the strain of the current housing shortage and soothe competition for rental homes.

If buy-to-let investment dries up, and the pool of properties to let contracts, rents will swallow the shortfall and eat into tenant finances.''

She added: Many households will be basking in confidence at the boosted spending power in the run-up to Christmas this year as inflation continues to tumble.

But this is only one factor that pulls on household purse strings and overall tenant finances across Scotland appear to be stuck in a rut without any clear improvements over the past year.

Long-term financial stability for renters rests on the jobs market.

It's not just about getting into work either - but ensuring wage growth for those already in employment accelerates to the next gear, preventing more working households from straying into the red zone and, in the worst-case scenarios, risking eviction.''

She continued: House prices have dusted themselves off from the flurry of uncertainty which unsteadied growth before the referendum.

But gross yields were hardly shaken by these tremors, propped up by solid rental income in the short-term, and with property values on the rise again landlords will see a return to sturdy capital gains over the long-term.

In this way, buy-to-let continues to stand out as a robust and lucrative investment, and confidence among property investors gives tenants plenty of reason to be optimistic too, as more investment in the sector bolsters the array of homes to let available on the market.''

Scottish Labour housing spokesman Michael McMahon said: These new figures show that we need to reform the private rented sector. It is a scandal that over 100,000 private renters live in poverty.

Too many families are just getting by, the last thing they need is an exploitative rent hike from a bad landlord.

That is why Scottish Labour proposed to ban rip-off rent rises.

The SNP were wrong to vote against our plans earlier this year. They joined with the Tories three times in 2014 to block a little protection for tenants.

They sided with bad landlords rather than families across Scotland.''