Private rents have dropped in real terms over the last seven years, according to analysis of the latest official data from the Office of National Statistics by DJ Alexander Ltd.
In the seven years since January 2015 up until August 2022 private sector rents in Northern Ireland have increased by 25%; in England 15%; in Wales 9.2%; while in Scotland 8.2%. Over the same period inflation has increased by 23.15%.
Consequently, rents across the UK have fallen in real terms with the exception of Northern Ireland where they have increased by 1.85% above inflation.
Since July 2021, however, rents have increased in Scotland and rose by 3.6% in the 12 months to August 2022 (down from 3.7% in July). In England rents rose 3.4% to August 2022; were up 2.5% in Wales; and increased by 8.4% in Northern Ireland over the same period.
Although the Scottish annual rate has been higher than England and Wales each month since July 2021, over the long term since January 2015, rents in England, Northern Ireland, and Wales have risen at a higher rate than Scotland.
The Scottish agency says that rents north of the border have seen a real term cut of 14.95%.
David Alexander, the chief executive officer of DJ Alexander Scotland, commented: “It is not surprising to find that rents are rising at record levels across the UK. With inflation in double figures, it is inevitable that rents will need to rise at a much higher level to keep up.”
“Demand across all sectors of the housing market in Scotland remains strong. We are continuing to experience much stronger volumes in rentals than we have had for many years.”
He continued: “The rental market is extremely buoyant in Scotland with some areas, such as Edinburgh, extremely popular. Workers are returning from the EU, and the jobs market is booming so the demand for homes in the private rented sector is busier than ever trying to meet this demand.
“The private rented sector remains the biggest supplier of homes to workers from outside Scotland, so it is essential that it remains viable if we are to provide homes for these essential workers as they return to live and work here. The demand in the private rented sector is likely to continue for the rest of this year and into 2023 as the economy emerges from the downturn caused by the pandemic.”
“However, it is important to remember that although rents are increasing at a higher rate in Scotland, they have for many years been rising at a lower rate than the other countries of the UK. In a sense the Scottish rental market is only now catching up with the other parts of the UK. Indeed, the official ONS data highlighting a real term fall of nearly 15% in private rents over the last seven years is quite shocking.”
Alexander added: “The pressures on the housing market have been intense over the last two years with lettings and sales both experiencing an unprecedented boom. Due to difficulties in the economy, rising interest rates, and legislative changes in Scotland it is now likely that both the sales and lettings markets will experience a substantial slowdown in the coming months and buyers and tenants will find it harder to get properties for some time to come.”
SOURCE: Property Industry Eye | OCTOBER 6, 2022 | MARC DA SILVA
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