Residential rental markets in cities around Scotland are facing the difficult reality of low supply of rental units that can’t meet the high demand. 

In Aberdeen, less than half the typical number of rental units are available. Units that do become available only stay on the market for a maximum of a couple of weeks, and Glasgow faces the same issue. There is a plethora of factors that play into this struggle, each one incredibly important and with lasting effects.

Scotland’s Rent Freeze

In October 2022, the Scottish Parliament passed emergency legislation that freezes most rents until March 2023. After this, landlords must cap rent increases at 3% until September 2023 unless it is extended for an additional 6 months. This legislation makes it difficult for landlords to raise rents for already leasing tenants, and it also only allows evictions under specific circumstances.

While this legislation is aimed at assisting tenants, it comes at the cost of landlords’ and other members of the real estate community’s income. As mortgage rates, interest rates, and general costs such as energy prices increase significantly, landlords have been selling properties to protect themselves from all the costs. However, this then limits supply for people looking to rent. Real estate agents and relocation specialists are having a difficult time finding enough work from clients with the limited supply of rentals available.

Demand from Multiple Demographics

Last year, high-income and international students that looked into higher-end apartments placed pressure on the supply for expatriates and other incoming tenants that looked for similar properties to rent. However, due to the strict regulations on landlords, such as the rent freeze and Private Residential Tenancy (PRT), landlords tend to prioritize potential long-term tenants so that the landlords have a more guaranteed income from tenants.

People entering the market after COVID-19 regulations have also increased demand for rentals. Workers who left the city during the height of the pandemic have been returning steadily. Expatriates and international workers are increasingly moving into cities. Those worried about the high-cost investment of home owning, especially first-time homeowners, have turned to renting instead to avoid major upfront costs and high mortgage rates for the time being.

Environmental Expectations

Currently in Scotland, any rental property must have an Environmental Performance Certificate rating of D or above. An EPC assesses and rates the energy efficiency of a property, with A being the most efficient and G being the least efficient. However, by 2025 any private rental property on the market in Scotland must have a C rating or above, and all private rentals must reach this rating by 2028. So, any property that is between a C and D will need to be renovated in the next few years. Due to this requirement, many potential renters looking to lease a property in the long-term have been considering modern buildings that already have a C or above rating, so they do not have to worry about dealing with renovations.

An Uncertain Future

The Scottish rental market has been facing multiple challenges in just the past year. As rents increase, legislation attempts to assist tenants, decreasing COVID-19 regulations bring an influx of demographics and people, and outside factors such as the environment impact properties, changes, and developments are expected to continue for the foreseeable future.


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