Rental Market Update

The latest property headlines have focused on how the coronavirus has been affecting residential sales. But how have rentals been faring amidst this pandemic? According to Zoopla, tenant demand in the UK dropped by 57% between the period of March 7th and March 30th. As shown in the graph below, tenant demand has since increased but remains 21% lower vs. the same period (mid-April) last year.

Despite the immediate and perhaps relatively short term impact Covid-19 has had on demand, statistics from Q1 appear to remain steady with year on year rental growth increasing by 2.4% and the average days on the market decreasing to 17.7 days vs 19.4 a year ago. 

Taking a closer look at the local market, both Edinburgh and Glasgow are sitting within the top 20 cities in the UK with the highest rental growth rates (3% and 2.8% respectively). Despite this, there has been a marked reduction in rental price growth when compared to the 5-year compound annual growth rate (Edinburgh, 4.7% and Glasgow, 3.4%).  

Zoopla’s report shows a broadly unchanged rental market in terms of the number of properties available and prices achieved. However, there is an expectation that the growth rate will moderate somewhat over the course of 2020 and the total number of moves is forecasted to be roughly 25% lower than in 2019..

Exodus of Properties from Short Term Rental Market

One of the most notable impacts of Covid-19 for Edinburgh in particular, has been the major shift from short term lets to long term rentals. The Times reported that Rightmove saw an 105% increase in new rental listings in Edinburgh city centre during the past week compared to the same period in 2019. This is the biggest increase seen amongst cities across the UK. 

The catalyst for this mass exodus from the short term lettings market has been the travel-ban that has caused the near collapse of Airbnb within the city. Cancellation of the Edinburgh Fringe Festival has provided further reason for landlords to turn their backs, at least temporarily, on letting short term as they will be without the inflated income usually achieved throughout August. 

Some good news for landlords?

This influx of stock into the long term letting market will likely have some landlords concerned about oversupply causing potential reductions in rental prices. Although this cannot be ruled out, the World Population Review predicts that Edinburgh’s population is set to increase by 25,000 in just 5 years, which will consequently impact demand for rentals.

Are you a landlord considering switching from short to long term letting? Our residential lettings team can help. Get in touch today on 0131 243 1217.