It’s fair to say that 2018 was a busy year in the Scottish property market. The government is building more homes, but there is clearly still a major housing shortage in Scotland resulting in an impact across all sectors. This is particularly true for young first-time buyers who are finding it increasingly difficult to get on the property ladder. ‘Generation Rent’ is fast becoming a reality with many younger people not being able to afford to own a home in the town they grew up in and is a sad sign of the times.
The Scottish property market continues to boom. The demand for residential property (particularly within the Capital and in areas such as Leith and Stockbridge) still massively outstrips supply. This in turn drives up property prices with no sign of it easing. According to a recent study, Edinburgh property prices are rising at a higher rate than any other city in the UK, with Glasgow not too far behind following the regeneration of the East End and the growing popularity of the Finnieston and West End areas. As oil prices continue to rise in Aberdeen, according to reports the current property market there is in its strongest position in 20 years.
In Scotland, we are finally seeing the Build to Rent (BTR) sector (purpose-built and investor owned residential properties intended specifically for renting rather than sale) gathering pace. This is backed by the Scottish Government to help deal with the housing supply shortage and whilst we are still way behind other UK cities, there are now over 4,000 BTR units in Scotland.
In December 2017, the new Scottish Private Residential Tenancy (SPRT) was introduced, a new tenancy regime for residential let properties in Scotland replacing the previous short-assured tenancy. It is designed to improve the private rented sector (PRS) and provide greater security for tenants. Changes to the tenancy agreements include no fixed terms, rent increases can only be made every 12 months and a longer notice period if the tenant has lvied in the property for longer than 6 months.
Regulation of the PRS was also introduced in January 2018. It provides a statutory ‘Code of Practice’ to be followed by all registered letting agents as well as mandatory training and qualifications for staff and First-tier Tribunal where tenancy issues are resolved via a panel of sector professionals. Any business which carries out letting agency work in Scotland was required to apply to join the Register of Letting Agents by 1st October 2018.
The big question is what impact will Brexit will have on the property market and house prices? Many are predicting that the demand for property in Scotland will see the market recover quickly from any initial Brexit-related dip, but at this stage it remains to be seen.
One thing we can be sure of is that until the government begins building more housing to bridge the gap, demand will continue to outstrip supply and property prices will continue to rise throughout the year.
If you have any questions regarding Property Insurance, please e-mail Jamie.McKenzie@brucestevenson.co.uk
Property Specialist and Account Executive - Bruce Stevenson Insurance Brokers