The UK-wide rental market has had its fair share of challenges in recent years, such as the additional dwelling surcharge on stamp duty, reduction on mortgage interest tax relief, tougher lending criteria and government regulation.

2020 will not be without its challenges. Alongside Brexit trade negotiations, the coronavirus may have a substantial impact on global economic growth.  While governments and central banks have committed to supporting markets through uncertainty, landlord and tenant expectations will need to align in order for demand to translate in to activity.

Despite these pressures, demand for rental properties across Scotland remains relatively strong. We saw very robust activity at the beginning of the year, with increased numbers of buyers and tenants firming up plans to buy or rent in 2020. As I write, our lettings team continues to receive good levels of enquiries, suggesting that some people, particularly those travelling from overseas, may simply be deciding to delay their move rather than cancelling their plans altogether.

My colleague Faisal Choudhry, who heads up Savills residential research in Scotland, has been analysing the wider rental market.  He tells me the number of households living in this sector has increased by over 200 per cet in 20 years, from 110,000 households in 1999 to 350,000 in 2018, and now makes up 14 per cent of all households. An increase of 27 per cent in the average asking price per calendar month across Scotland over the last decade therefore comes as no surprise.

Edinburgh remains the most popular and valuable rental market in Scotland, with 25 per cent of households living in this sector. The average asking price per calendar month reached £1,134 at the end of last year, according to Citylets.

In a similar trend to the sales market, the capital faces the challenges of constrained supply and strong demand from professionals, particularly for one and two-bedroom properties below £1,000 per calendar month. But there is also high demand from families for appropriately-priced larger properties in good condition close to the city centre.

One of the main questions my team is asked about the market is the impact of Scotland’s Private Residential Tenancy.  Now a permanent feature of the lettings market in Scotland, it came into force on 1 December 2017, replacing the assured and short assured tenancy agreements.

Its aim was to provide increased security, stability and predictability for tenants, while introducing appropriate safeguards for landlords, lenders and investors. In our opinion, appropriate pricing, high quality management and more awareness of associated costs by landlords have been some of the main consequences.

Despite properties taking a relatively short period to rent, it has become more important to be aware of tenant intentions to ensure longer letting periods, minimal voids and less costs for both landlords and tenants.

Further information

Contact Savills Scotland