Brexit is dampening rental market in Scotland says Buy to Let index from Your Move
The impending Brexit is dampening the rental market in Scotland as many European Union migrants depart the country following last year’s leave vote, according to the latest Scotland Buy to Let index from Your Move.
Across the whole of Scotland rents rose 4.9% in the past 12 months with the average property let for £575 per calendar month but while the market continued to grow as a whole, there were divides between the five regions surveyed.
The strongest performance (seasonally adjusted) came in the South of Scotland where prices increased by 4.2% in the last 12 months to hit £560 but there is evidence that the “Brexit effect” has hit demand across all regions surveyed.
“This month we have continued to see demand reduce in several areas – particularly those with high numbers of migrants from European Union countries,” said Brian Moran, lettings director, Your Move Scotland.
Its impact has been most keenly felt in the Glasgow and Clyde and Highlands and Islands regions.
Prices in Glasgow and the surrounding areas dropped by 3.5% in the year to February 2017 –faster than anywhere else. The average property in this region now rents for £565 a month, 0.1% lower than a month ago.
A lack of demand was one reason prices fell in the Highlands and Islands region, where prices have dropped 3.3% in the last year and now stand at £586. Demand in this area has also been affected by the Scottish Government’s LIFT Scheme (Low-cost Initiative for First-Time buyers, which promotes 0% deposit mortgages and has helped more people move from being renters to homeowners.
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The East of Scotland remained the cheapest place to rent in February, with the average property letting for £535 a month – 2.3% higher than the same point in 2016.
Yields levels remained solid in February with landlords and property investors continuing to see strong returns from the Scottish rental market The average yield was 4.9%, the same level seen both in January 2017 and in February 2016.
This also compares strongly to property investment in other parts of the UK, with landlords in Scotland continuing to see much better returns than the average investor in England and Wales, where the average yield in February stood at 4.1%. Only landlords in the North East and North West regions of England enjoyed better returns – 5.3% and 5% respectively – this month.
Rent arrears among tenants in Scotland fell in February 2017 to 10.5%, down from 11.7% in January 2017. Scotland’s arrears rate for this month remains above the level found in England and Wales, where the average rate of arrears was 8.1% during February.