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Property Investment yields rose in March for the first time since March 2017, according to the latest Your Move Scotland Rental Tracker.
The average rental property generated an investment yield of 4.7 per cent for its owners in March, higher than the 4.6 per cent recorded in February. This means that landlord returns are now at a six-month high.
This is in contrast to England and Wales, where property investment yields have held steady. Across both nations the average return this month was 4.3 per cent. The only two regions to offer returns higher than the Scottish average during March were the North East at 5 per cent and the North West at 4.8 per cent.
Across Scotland the average rent increased 1.8 per cent in the past 12 months to reach an average of £580 (seasonally adjusted). This is 0.2 per cent higher than a month ago. On a non-seasonally adjusted basis the average rent was £593.
In order to boost investment yields, rents rose in most areas of Scotland, although the pace of increase has slowed from the highs seen in 2018.
The Highlands and Islands region posted the biggest increase, with a typical property now being let for £688 per calendar month. This is 4.9 per cent higher than a year ago, but lower than the double-digit increases seen last year.
The only area to have higher rents was the Edinburgh and Lothians region, where the typical tenant pays £699 a month. This follows a 4.6 per cent year-on-year rise.
The South of Scotland was the only region to see prices fall on an annual basis, dropping 1.9 per cent to £537. It remains the cheapest place to rent in the country.
However, on a monthly basis the South of Scotland saw rents rise by 0.6 per cent month-on-month while the East of Scotland posted a 0.5 per cent rise. The largest fall was the 2.5 per cent decrease recorded in the Glasgow and Clyde region, while the Highlands and Islands saw a 0.5 per cent fall.
Brian Moran, Lettings Director for Your Move Scotland commented on the increase in investment yields, saying: ‘Investors in Scotland have seen stronger returns this month than in February. This is the first rise in monthly yields since March 2017 and demonstrates why many investors from elsewhere are now looking towards Scotland to maximise returns.’
He added: ‘Additionally, with more tenants now renting for longer thanks to the introduction of the PRT, landlords are benefitting from the increased security and stability provided by these tenancies.’