4. Private Rental Sector
Private Housing Rental Prices
Private housing rental prices in Scotland increased by 3.1% annually to May 2022. Nominal private rental price growth had been relatively stable since June 2017, ranging between 0% and 2%, with an average of 0.9% to May 2022. However, in recent months nominal rental prices have increased, with the 3.1% annual growth in February the highest recorded since the index began.
In real terms (adjusting for inflation, using CPI), the annual change in May 2022 was -5.4%. Chart 4.1 shows that the annual change in real private housing rental prices rose towards positive territory as CPI inflation fell due to the impact of Covid-19, but it has returned to negative territory with the recent spike in CPI inflation, which reached 9.1% in May 2022. The heightened level of CPI inflation can be partly explained by an increase in the price of food and non-alcoholic beverages, as well as in energy prices.
Source: ONS Rental Price Index, Consumer Price Inflation (CPI)
Scottish Government statistics show that from 2010 to 2021 (years to end September), four broad market rental areas ("BRMAs") have seen average rents for 2 bedroom properties increase, on an average annualised basis, above the average level of CPI inflation (2.0%): these are the Lothian (3.2%), Greater Glasgow (3.2%), Fife (2.6%) and the Forth Valley (2.4%) BRMAs. Therefore, the annualised average rate of change was equal to or below that of inflation (CPI) in 14/18 BRMAs, with the lowest annualised rate of change seen in Aberdeen and Shire of just 0.1%.
Source: SG/ONS CPI
* Note: Scottish Government statistics are based almost entirely on advertised rents at point of new let, and thus will tend to be higher than the ONS data which makes an allowance for rent changes in existing lets. In addition, Chart 4.2 looks solely at 2 bedroom properties, whilst Chart 4.1 looks at the entire market.
The Coronavirus (Recovery and Reform) (Scotland) Bill, introduced to Parliament on 25 January and was passed on 28 June, seeks to embed reforms in Scotland's public services and justice system that, though necessitated by the Covid pandemic, have delivered improvements for service users and improved efficiency.
Part 4 of the Bill relates to eviction from properties and means certain measures introduced in response to the pandemic in the private rented sector will continue. These are maintaining pre-eviction protocols relating to rent arrears in the private rented sector, ensuring that tenants have all the information they need about their rights, and that all grounds for repossession will continue to be discretionary, ensuring that the First-tier Tribunal for Scotland (Housing and Property Chamber) are able to take the circumstances of both parties into account when deciding whether an eviction is reasonable.
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