Private rents in Citylets decrease as Housing Bill is introduced in Parliament

The pressure on rents for new tenancies in Scotland’s private rented sector has started to ease with all major cities now reporting single-digit annual growth, according to new figures from Citylets.

Citylets revealed that the statistics in its new report suggest that the market may be beginning to rebalance just as further controls have been proposed for discussion in the new Housing (Scotland) Bill.

Citylets expressed that this development will be well received by tenants but could be a cause for concern for landlords and institutions looking to contribute to the supply of rented homes in Scotland. The organization stated that without the freedom to operate in an open market, many privately funded developments may not be constructed, particularly at a time when the public housing budget for affordable homes has been reduced.

Thomas Ashdown, Managing Director of Citylets, commented: “Rents in the open market of the Scottish private rented sector seem to be moderating in various locations, indicating a market that is moving towards a better balance after potentially temporary market distortions caused by the pandemic. The reported halt of large-scale projects that were set to introduce a significant new supply of rental homes would be regrettable, especially when it is uncertain where these homes will come from.”

Temporary legislation has replaced the expired emergency legislation at the end of Q1 2024, introducing controls within tenancies and a cap on rent increases of up to 12%. Although new rents in the open market continue to operate freely, the proposals in the new Housing (Scotland) Bill, currently under parliamentary review, aim to establish rent pressure zones in local markets that are experiencing overheating.

Gillian Semmler, PR Manager at Citylets, stated: “Initiatives to expand controls in Scotland’s private rented sector may have good intentions, but they must be carefully and responsibly balanced against their impact on rental supply.”

Adrian Sangster from Aberdein Considine remarked: “Recent changes to rent cap regulations in Scotland’s dynamic letting market have attracted attention. While these regulations aim to strike a balance between tenant rights and landlord returns, demand continues to outpace available supply. Despite this, there is a silver lining for landlords, as stagnant property prices and rising rents present attractive investment opportunities.

“In this environment, astute landlords find themselves in a fortunate position, as the market’s dynamics create a favorable moment for acquisition. With rental yields increasing, the Scottish letting market remains an enticing arena for landlords to navigate, offering both challenges and promising returns in equal measure.”