According to recent research, the average buy-to-let property gained £15,000 in value during the pandemic with Scotland seeing some of the biggest price rises. The typical value of a rental property went up by 6% from March 2020 to March 2021, but in Scotland this figure was 11%. It’s believed that these increases are a result of people moving out of cities in search of more space. Across the UK, the value of the private rented sector has grown 5.8% to £1.4trillion due to the housing market boom we have seen over the last 18 months. Although the value of the buy-to-let sector went up, the number of available properties for sale fell. Mortgage lender Shawbrook Bank carried out research into the effect the pandemic on UK landlords. Scotland, along with the North West of England and Wales, saw the most dramatic increases. Scotland was highest at 11%, North West 10.7% and Wales 9.5%. In addition, according to the latest Nationwide index, residential house prices jumped by 10.5% in the year to the end of July. According to the survey, over 30% of landlords planned on a more rural location for their next investment property and were attracted by features that would attract tenants as a result of the pandemic such as a garden, space for home working and more internal space.

LBTT holiday

The LBTT (stamp duty) holiday resulted in a 25% increase in those who purchase a buy-to-let property, rising to 43% for landlords with a portfolio of four or more properties. In addition, 46% of landlords said that they would not have purchased a buy-to-let property had it not been for the LBTT holiday. The tax break, along with rising house prices, attractive yields and high demand from tenants, has resulted in this spike.

Scotland best for rental yields

The survey also found that Scotland was the best for rental yields, with an average yield of 5.8% closely followed by the North West at 5.5%.

A fall in supply

While the value of the buy-to-let sector increase, there was a marked decrease in available rental properties as landlords exited the market. The number of private rented properties fell by 2.6% in the year from March 2020. Figures from the National Residential Landlords Association show that the number of landlords planning to purchase a property fell from 19% in this year’s Q1 to 14% in Q2. By contrast, the number of those selling up was 20% higher. Two thirds of landlords surveyed were confident about the market in the coming year.

Research carried out by Manor Interiors has revealed that the cost of renting for a student has increased as much as 26% in some areas of the UK but have actually fallen by 2% in Scotland. Manor Interiors, specialists in built-to-rent furnishing solutions, has found that the average student in Britain pays £132 to rent a student property, reaching £152 in London. However, London and Scotland are the only two regions in the UK where rents have gone down – 16% down in London and 2% in Scotland. In Scotland students now pay an average of £127 per week. Students in the East Midlands have seen the largest increase, paying an average of £129 per week which is a 26% in crease in just five years. There were also increases in the North West up 20%, Yorkshire and the Humber up 23% and the Humber up 21%. For students, every penny counts and any rise in rental payments could seem significant and affect where they choose to study. However, this hasn’t dampened the appetite for a university education and a record number of students have looked to secure a place at University this year.

Scotland Student Accommodation in Crisis?

According to a BBC report this week, Scotland is facing a housing emergency driven by a shortage of suitable student accommodation and rising rental costs. NUS Scotland has issued a warning that unprecedented demand has left some students without any suitable lodgings and have resulted in some students considering dropping out of their university course. Some landlords have reportedly requested six months rent upfront, while others are waiting until COP26 is over as they can command high short-term rental fees during the climate conference. With life getting back to normal for students and a return to in-class learning, the housing situation is causing concern for students and the NUS who has revealed that they have never experienced as many requests for support to help people find places to live. NUS Scotland president Matt Crilly has written to the Scottish government to highlight these concerns and says: "For many students, particularly those studying in the central belt of Scotland, there is currently a lack of safe and affordable accommodation, with purpose-built student accommodation full, shortages in the private rented sector, and landlords holding off to make a profit from COP26, I am concerned we have a student housing emergency." John Blackwood, chief executive of the Scottish Association of Landlords (SAL), said: "We are seeing a chronic shortage of private rented accommodation across Scotland, partly as a result of landlords leaving the sector over the past couple of years which has reduced supply. In addition, landlords warned in 2017 that an unintended consequence of the Private Residential Tenancy (PRT) could be a reduction in accommodation available to students as landlords were no longer able to offer fixed-term leases which matched with term times. As a result, properties which landlords would hold back and market specifically for students are now rented by people as their primary home on a longer-term basis. One of the key aims of the PRT has been achieved but it is students who are suffering."