This site uses cookies. For more information, please see our Privacy and Cookie Notice. If you dont agree to our use of cookies, please navigate away from this site now.

News

DECEMBER 20, 2017 | BY Perthshire Property Services
Perth Rents Set to Rise to £616 pm in Next 5 Years

It’s now been a good 12/18 months since annual rental price inflation in Perth peaked at 1.9%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Perth rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years, it is my opinion Perth rents will regain their upward trend and continue to increase as demand for Perth rental property will outstrip supply, and this is why.

The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Perth). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Perth, that Perth landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Perth buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Perth landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin). 

So, what does this all mean for landlords and tenants in Perth? In my considered opinion,

Rents in Perth over the next 5 years will rise by 8.1%, taking the average rent for a Perth property from £570 per month to £616 per month.

To put all that into perspective though, rents in Perth over the last 12 years have risen by 16.9%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Perth economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections

 

In the past, making money from Perth buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Perth property market, as a Perth landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Perth, Regional and National property market’s, to enable you to continue to make money.