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The housing provision in Scotland’s capital has always included a high proportion of rental properties, but many of these have been purely for short-term holiday let. Edinburgh landlords have been able to captialise on the high number of visitors attracted to Scotland’s capital all year round, particularly during in the Edinburgh Festival and Hogmanay celebrations.
However, with lockdowns putting a temporary stop to the travel and tourism industry, many landlords have swapped their properties out of this sector, seeking long-term tenants instead.
Simultaneously, tenants who have been locked down in smaller one and two-bedroom flats have been looking for more space indoors and out, with some young professionals moving back to the family home and other renters seeking more for their money in the country. These trends are occurring at a time when cities have been perceived as rather less vibrant places to live, and working from almost anywhere has become possible.
This has resulted in a glut of smaller apartments being launched on the long-term market in Edinburgh. As such, landlords competing for city centre tenants have had to take a pragmatic view on rents. This has pulled down the median asking price per calendar month across the overall market in Edinburgh, which fell annually by 4 per cent in the 12 months to the end of June this year.*
Conversely, and looking at the bigger picture, the overall rental market in Scotland is in very good shape. Values for rental properties in Glasgow rose annually by 4 per cent over the past year while rents in Aberdeen and Dundee have remained stable.* Further, larger family rental properties in country areas and across many Scottish leafy suburbs – including prime locations within reach of Edinburgh city centre – are now highly sought after.
Current demand is being generated by a variety of sources. Long-term renters are competing with those looking for somewhere to live on a temporary basis while they search for their permanent new home. Others are securing long-term second home rentals in a variety of locations now that remote working has enabled them to spend time away from cities. These trends have been depleting available rental stock at a time when some landlords are selling property in order to take advantage of the high prices being achieved in Scotland’s hot sales market.
This supply and demand imbalance has resulted in rental properties, particularly larger properties with gardens, remaining empty for shorter time periods and achieving higher rents. People are placing a greater priority on lifestyle than ever before and we expect this pandemic-driven trend to continue in the medium to longer term. Indeed, a further strengthening of the rental market, particularly for spacious family homes in commuter belts, is anticipated.
However, as the nation’s vaccination programme and subsequent relaxation of social distancing measures continue, we expect demand for smaller properties, including in Edinburgh city centre, to normalise gradually. As the economy gathers momentum and offices reopen, young professionals who have missed the buzz of the city will once again wish to live near their reopened offices and there is likely to be a further boost from the corporate sector looking to relocate staff once again.
Finally the resumption of international travel will give a welcome boost to the tourism industry and we fully expect Scotland to become a magnet for holidaymakers in all the usual hotspots, bringing this traditional dynamic back to the capital’s rental stock.
* Savills Research using Rightmove.
Further information
Contact Faisal Choudhry or Charlie McCosh