A new survey of the residential property market has revealed that the number of rental properties in Scotland has fallen even further over the last three months. However, this decrease in supply has been coupled with an increase in demand, which is expected to lead to a sharp rise in costs for tenants.
The recent survey from the Royal Institute of Chartered Surveyors Scotland (RICS) of the residential market revealed a continued trend of fewer new properties being put on the market in the letting sector from May-July 2018. Respondents to the survey reported a fall in new landlord instructions overall, making this the tenth consecutive quarter this has happened.
Strong Demand for Rental Properties from Tenants
Tenant demand for rental property continues to remain “resilient” as chartered surveyors report a rise. This clear imbalance in supply and demand means that rents for consumers will inevitably rise. Over the course of the next 12 months, it is anticipated that rents will rise by just short of +2% across the UK. However, in the short term more than 42% of respondents to the survey expected rents to rise in Scotland in the next three months.
Furthermore, July brought a drop in property sales. 37% of respondents noted a decline in new properties coming on to the market, with 49% of respondents expecting property prices to rise in the next three months.
Chief Economist at RICS, Simon Rubinsohn said:
“The impact of recent and ongoing tax changes is clearly having a material impact on the buy to let sector as intended."
“The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the build to rent programme or government-funded social housing."
“At the present time, there is little evidence that either is likely to make up the shortfall.”
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