Rental growth in Scotland slows but landlords continue to see strong yields

Rental growth in Scotland’s private rented sector has started to slow with average rents up by just 0.7% in the 12 months to February 2018, the latest tracker index shows. The average rent reached £569 a month, up 1.4% month on month but down 1.2% year on year, according to the data from the Your Move index. It also reveals wide regional differences across the five Scottish area covered. Highlands and Islands, Edinburgh and the Lothians and Glasgow and Clyde recorded rent rises, led by a 10% surge in the Highlands and Islands to an average of £644. The next fastest growth was in the Edinburgh and Lothians area, where the average price is now £666 following 2.5% growth while in Glasgow and Clyde rents increased by 1.2% to £572. The biggest fall was a drop of 2.3% year on year in the South of Scotland to £548 a month while prices in the East of Scotland fell by 0.2% to £534. The index also shows that after a fall in January, yield levels stabilised during February and remain competitive compared to the returns found in England and Wales. Your Move Scotland found the average property in the country delivered a return of 4.7% to landlords, unchanged from the previous month but down on the yields recorded throughout 2017. However, property investment in Scotland remains attractive when compared to the market in England and Wales. Across the two nations the average yield was 4.4% during February and on a regional basis only three areas boasted stronger returns. Only landlords in the North East of England, the North West and Wales had better yields at 5%, 4.9% and 4.8% respectively. ‘While growth has slowed compared to recent times, the Scottish market continues to grow at a healthy and steady pace,’ said Brian Moran, lettings director of Your Move Scotland. ‘Yields remain strong compared to the average found in England and Wales, which will provide further encouragement to landlords looking to invest further. The outlook remains positive, although all landlords should check that their current letting agent is compliant with new rules from the Scottish Government,’ he added.