Q1 Rental Market Overview

With effect from 1/4/24 landlords can propose a rent increase. You should have all received a recent communication from us asking if you want to increase the rent on your properties. If your tenant wishes to challenge the increase, they can refer it to a rent officer who must apply a tapering formula. In summary:

  • If the gap between the current rent and the market rent is 6% or less, then the landlord can increase the rent by the proposed amount, if this is not more than market rent.
  • If the gap between the current rent and the market rent is more than 6%, the landlord can increase the rent by 6% plus an additional 0.33% for each percent that the gap between the current rent and market rent exceeds 6%.
  • The upper limit to the total rent increase cannot exceed 12% of the current rent.

The above procedures only apply to mid-tenancy increases. There is no restriction on how much landlords can increase rents by between tenancies. We will continue to adjust rents to market level when re-advertising your property should you wish this done.

If your tenant does not challenge the increase, the amount proposed will take effect at the end of the notice period. Rent increases are still subject to the underlying rules which state tenants must be given 3 months’ notice of a rent increase and only one increase in any 12-month period.

Many of our landlords have taken the opportunity to increase rents with many increasingly finding their finances under duress should the much-heralded drop in interest rates not materialise or sustain a downward trend. Whilst tenants rightly have concerns for steep rent rises, they may be dwarfed by rises in landlord mortgage costs challenging viability. Interest rates have risen over the past two years to help slow down inflation and whilst it is working (11% in 2022 down to 4% in Dec 2023) it is still much higher than the Bank of England target of 2%. Their policy is to keep interest rates high for long enough to get inflation back to the 2% target in a lasting way, which is not great news for landlords with Buy To Let properties and worse still for tenants, should their landlords choose to exit the rental market.

With public funds for affordable housing reducing, it is hard to see where new housing is going to come from which puts a strain on existing housing stock but ensures that first time landlords entering the sector should have little difficulty finding tenants for their properties with demand continuing to outstrip supply.

We saw a good example of this recently. Four of our 1 bed flats advertised for rent generated 118 applications, not enquiries, but actual applications. This demonstrates the demand for property of this type in Dundee.

In Scotland’s dynamic letting market, recent changes to rent cap rules have grabbed attention. While such regulations aim to balance tenant rights and landlord returns, demand continues to surge, eclipsing available supply. Despite this, a silver lining emerges for landlords, with stagnant property prices and escalating rents yielding attractive investment prospects. Amidst this landscape, prudent landlords find themselves in a fortuitous position, as the market’s dynamics offer an opportune moment for acquisition. With rental yields on the rise, the Scottish letting market remains a compelling arena for landlords to navigate, presenting both challenges and promising returns in equal measure.

There continues to be a shortage of available property with some agents capping viewings for properties advertised leaving tenants frustrated in trying to secure tenancies.


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