A spring wobble in Scottish rental prices

May 27, 2012

Landlord Information

A BBC news report* has indicated that, to the surprise of some, surveys show that rental rates have declined over recent months in the centre of Edinburgh.

This is highly unusual as Edinburgh, along with London, is normally regarded as being a relatively safe bet for ongoing high rental income levels.  Historically the Scottish legal establishment, the Scottish Office and major financial companies with their headquarters in city, have all ensured high property prices and a lucrative rental marketplace.

This process has often insulated Edinburgh from the price reductions that have hit other parts of the UK during previous financial crises – and that insulation looked even more secure as the new Scottish parliament was established in the city some years ago.

The reductions in average rental prices has therefore come as a bit of a shock, particularly when it appears to be going against the trends in some other parts of the UK – including Edinburgh’s west coast rival of Glasgow.

The report attributes this reduction to a glut of effectively unsaleable property in Edinburgh.  It seems as if increasing numbers of private owners, frustrated at their inability to sell their properties for the price they want, are being driven to move into the business of becoming de facto landlords.

Yet some sources have been pointing out for sometime that there would very possibly be a knock-on effect on the rentals market and rental rates, if the property market itself remained sluggish or even still retreating in some areas.

It doesn’t require too much a leap of the imagination to see that some vendors, desperate to move on but unable to do so, would not sit indefinitely trying to sell their property but would need to start trying to obtain income from it somehow – i.e. letting it and hopefully remembering that they’ll need a let property insurance quote in the process.

It isn’t immediately obvious why this problem should be restricted to Edinburgh and it may simply be the case that Edinburgh is one of the first locations to be affected due to its historically very high property prices compared to other UK locations outside of central London.

Landlords will be watching this position with interest and may regard it as yet another indication that the economy continues to look both vulnerable and fragile.

*Source:

http://www.bbc.co.uk/news/uk-scotland-scotland-business-17729389

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