Rents hit a record high as second homes surcharge begins to hit

Rents in Scotland are at a record high, after the fastest month-on-month growth on record. 

Data from Your Move shows that average residential rents in Scotland have shot up 1.3 per cent in May, after the cost of the new Land and Buildings Transaction Tax surcharge has pushed up prices in the market.

The Scottish Government added three per cent LBTT - the country’s tax which replaced stamp duty north of the border - in a move which mirrored the SDLT three per cent surcharge on buy to let and holiday home purchases in England, Wales and Northern Ireland.

This increase means that the average rent in Scotland now stands at £549 per month. This is the highest Scottish rents have been ever been, surpassing the previous record set in July 2015.

This month also marks five years since the Scottish National Party gained an overall majority in the Holyrood. Since then, average rents have seen a 7.9 per cent upswing from £509 per month in May 2011.

“This tax hike has dissuaded landlords from investing in the sector leading to a shortage of homes to rent, compared to the demand for housing. With the limited supply of rental properties, potential tenants have been forced to compete to secure homes, pushing up rents. The introduction of this anti-landlord legislation from Holyrood has ensured the cost of the policy has hit tenants hardest” claims Brian Moran, lettings director at Your Move.

“Since the SNP came to power five years ago, monthly rents have increased by an average of £40. However, the rent control policy in the Scottish Government’s private tenancies bill will only treat the symptoms, not the cause of rising rents. By limiting the rent that can be charged on a property, becoming a landlord will become less appealing, limiting investment and forcing many to consider leaving the sector. This will lead to an even greater shortage of homes to rent” he adds.