Scottish residential rents recorded the largest month on month growth recorded between April and May, rising 1.3 per cent to their highest ever average of £549 per month.
According to the latest Scotland buy to let index from Your Move all Scottish regions showed rises, with Glasgow and Clyde topping the list with a monthly rise of 1.9 per cent, closely followed by Edinburgh and the east of Scotland which both saw rises of 1.7 per cent.
The rent rises have been partly blamed on the new Land and Building Transaction Tax which has led to a shortage of available rental properties to cope with the rising demand, therefore resulting in competition from tenants for limited stock pushing up rental prices.
Average buy to let yields for landlords have also shown a slight improvement, up 0.1 per cent from April standing at 4 per cent. This also shows a year on year increase from the 3.8 per cent average seen in May 2015.
On a less positive note tenant arrears have worsened slightly with the proportion of late rent increasing from 11.6 per cent in April to 12.5 per cent in May. This also marks an increase year on year from the level seen in May 2015 of just 8.8 per cent.
Brian Moran, lettings Director at Your Move Scotland, commented: ‘With total annual returns slowly improving and gross yields also rising, landlords have enjoyed some plain sailing recently. However, the full impact of the LBTT surcharge, the reduction in mortgage tax relief and private tenancies bill are yet to be felt.
‘It appears landlords may now be heading into choppier waters, with the storm of legislation heading their way. At a time when the number of people looking for homes to rent continues to rise, landlords will need to weather this tempest, if they are to meet Scotland’s housing needs.’