Rents have recently increased dramatically, posing a serious problem for tenants in Scotland and the rest of the UK. Many tenants and potential tenants are confused by the rise in rental prices and find it challenging to manage the mounting financial load. In this post, we will examine the numerous variables that have contributed to the sharp increase in rental prices over the past two years in Scotland and the larger UK rental market.
UK Rental Market: Factors That Contributed to Higher Rent Prices
Rising Demand Outstripping Supply
One of the primary factors contributing to the rise in the cost of renting is the growing demand for rental properties, which has outpaced the rate at which new properties are becoming available. This supply and demand imbalance has been exacerbated by various factors, including a rapidly increasing population, a rise in single-person households, and a delay in housing construction projects.
Pandemic-Driven Trends
The COVID-19 pandemic reshaped our way of life in profound ways. With remote work becoming the norm for many, there was a noticeable shift in housing preferences. People began seeking larger homes with dedicated home offices and access to green spaces. This shift in demand for specific features further fuelled the rise in rental prices.
Rent Controls
To help tenants during the COVID-19 pandemic, the Scottish and UK governments stopped landlords from evicting tenants and limiting how much rent they could charge. These policies were meant to help renters, but they had some unexpected effects. Landlords, facing financial uncertainty, raised rents to compensate for potential losses from the eviction ban and rent controls.
Property Prices and Mortgage Rates
Rental costs are strongly affected by the cost of buying a home. When home prices go up, people who want to buy a home may wait instead, which increases the number of people who need to rent. Also, low mortgage rates have made it easier for homeowners to rent out their properties, so recent increases have reduced the number of rental units available.
Inflation
The rising rents and cost of living, which is partly due to inflation, have made it more expensive for landlords to keep their rental properties in good condition and running smoothly. To compensate for these higher costs, landlords may implement a rent increase.
Housing Shortage
Slow development and a lack of suitable land for construction have led to a housing shortage in some areas. The problem is further complicated by the fact that local government regulations have a big impact on whether new rental units are approved and built. These interrelated issues have resulted in a marked imbalance in high demand and supply, making it difficult for renters and property seekers to find accommodation.
Renovations
To entice tenants willing to pay a premium rather than the average rent, savvy landlords frequently invest strategically in improving their buildings. These improvements and renovations not only raise the rental unit’s general quality but also provide value and convenience for the tenants. This additional worth can provide a basis for setting higher rental rates, reflecting the property’s better living accommodations and amenities. Such proactive actions benefit the landlord and help improve the rental market.
Short-term Rental Properties
The rise of short-term private rental platforms like Airbnb has led to a decrease in the supply of long-term rental properties. This is because some property owners find it more profitable to rent their properties out to short-term guests than to long-term tenants. As a result, rents in the traditional rental market have increased and may continue rising.
Rental Costs in 2023
The average rent in the UK in September 2023 is £1,276. If you exclude London, the average rents hit £1,061. Every region in the UK has seen an increase in rent prices over the past year, with Scotland seeing the largest increase at 13.34%. The North East of England is the cheapest region to rent in, with an average rent price of £668 per month.
In other words, rent prices in the UK are high, and they are rising. The most expensive region to rent in is London, and the cheapest is the North East of England. Scotland has seen the most significant increase in rent prices over the past year.
As Renters, You Should Stay Informed About The Latest Rent Increases
The recent rise in rents across the UK and Scotland is due to several factors including, the pandemic, government policies, Brexit, and inflation. As a result, renters are facing the challenge of finding affordable housing. Tenants and prospective renters should stay informed about the factors affecting rental prices and explore their options. Seeking help from reputable letting agents can also be helpful in the competitive rental market.
