Edinburgh Rental Market Update – March 2024: Trends, Challenges, and Opportunities

The Edinburgh rental market is known for its dynamic nature, influenced by a mix of seasonal demands, economic factors, and policy changes. In March 2024, the market shows both resilience and some challenges that may impact renters, landlords, and investors alike. Whether you’re a tenant, landlord, or investor, it’s crucial to stay informed about current trends to make the best decisions in this evolving market.

Current Trends in the Edinburgh Rental Market

1. Rising Demand for Rental Properties Edinburgh continues to attract students, young professionals, and families looking for a high-quality lifestyle in a city that blends history with modern amenities. Demand has outpaced supply in recent years, and March 2024 is no exception. Students from the University of Edinburgh, Napier University, and Heriot-Watt University keep rental demand strong, particularly in central and west Edinburgh. As a result, prime rental properties in areas like New Town, Stockbridge, and Bruntsfield are experiencing high occupancy rates, pushing rental prices higher.
2. Higher Rental Prices Across the City According to recent data, the Edinburgh rental market has seen steady price increases across the city. Average rents in popular neighborhoods have increased by 8-10% compared to March 2023. Rising mortgage rates and increasing property taxes have prompted many landlords to adjust rental prices accordingly. In neighborhoods like Leith, Morningside, and Portobello, two-bedroom apartments are now renting at record rates, with prices exceeding £1,200 per month in some cases. For those looking to move to Edinburgh, it’s essential to budget for these increases.
3. Shift Towards Smaller Rental Properties As affordability becomes a greater concern, there’s a notable shift in demand towards smaller apartments and studios. Single renters and students, in particular, are opting for studio and one-bedroom apartments to manage costs. Areas like Haymarket and Fountainbridge, known for their proximity to transport hubs and amenities, have seen a marked increase in interest for these smaller, more affordable rental units.
4. More Stringent Rental Regulations Edinburgh’s rental market has recently faced tightening regulations to ensure fair housing and tenant protections. The introduction of rent caps has brought more stability for tenants, but some landlords have opted out of long-term rentals due to these restrictions, which has slightly reduced the available stock. For landlords, it’s crucial to stay updated on these regulations to maintain compliance and avoid penalties.
5. Increasing Popularity of Energy-Efficient Properties The demand for energy-efficient properties is also shaping the Edinburgh rental market. With rising energy costs, renters are increasingly looking for homes with better energy ratings. Landlords who have invested in energy-saving upgrades—such as double glazing, insulation, and energy-efficient heating systems—are likely to find their properties in higher demand and potentially command premium rents. Eco-conscious renters are also seeking properties that align with their values, so landlords may benefit from highlighting the sustainable features of their homes.

Key Challenges in the Edinburgh Rental Market

1. Affordability Concerns With rising rental costs, affordability is a significant issue in Edinburgh. For many renters, securing an affordable home in the city center is becoming more challenging, pushing some to consider suburban areas or neighboring towns. This shift could result in an increase in rental demand in suburbs like Musselburgh and Livingston.
2. Supply Constraints Despite the strong demand, the supply of rental properties remains limited. In part, this shortage is due to some landlords opting to sell their properties rather than comply with the increasing regulatory requirements. Additionally, the high costs of new construction have slowed the delivery of new rental units to the market.
3. Competition for Rental Units Tenants looking for rental properties in March 2024 should expect stiff competition, especially in popular areas. Prospective tenants are encouraged to act quickly, prepare their documents in advance, and consider working with rental agencies that have a strong presence in Edinburgh’s market to enhance their chances of securing a home.

Opportunities for Investors

For investors, the Edinburgh rental market still presents several lucrative opportunities:

• Short-Term Rentals: Given the city’s vibrant tourism industry, short-term rentals remain a profitable option. However, investors must navigate local licensing requirements and seasonal demand.
• Suburban and Satellite Town Investment: With more tenants willing to consider the outskirts, towns like Musselburgh, Dalkeith, and Livingston offer good opportunities for rental investments that cater to cost-conscious renters.
• Energy-Efficient Upgrades: For landlords willing to invest in sustainable improvements, energy-efficient properties can offer a competitive edge and even attract premium tenants willing to pay higher rent.

Tips for Renters in March 2024

• Act Fast and Be Prepared: With high demand and limited supply, renters should respond quickly to listings, have references and financial documents ready, and consider expanding their search to areas outside the city center.
• Consider a Rental Agency: A rental agency can provide guidance and potentially offer access to new listings faster, improving your chances of securing a property in Edinburgh’s competitive rental landscape. 

The Edinburgh rental market in March 2024 is characterized by high demand, rising rental prices, and evolving regulations. While challenges like affordability and supply constraints persist, opportunities exist for savvy investors and tenants who adapt to these changes. As Edinburgh continues to grow and evolve, staying informed will be the key to making smart rental decisions.

The beginning of 2024 has witnessed a significant shift in the Edinburgh rental market.

After two years of low availability of properties, intense competition among tenants for new homes, and rapidly increasing rents, the rental market in Edinburgh seems to be slowing down.

INCREASE IN AVAILABLE PROPERTIES

The number of properties available for rent in Edinburgh on Rightmove at the end of February stood at 891, which is 84% higher than the same time last year. There have been over 30% more listings added to the market in the first two months of 2024 compared to 2023. While this partially accounts for the increased availability, there is also evidence that tenant demand and rental property supply are starting to align more closely after a challenging two years for tenants seeking accommodation.

SLOWING MARKET LEADING TO COOLING RENTS

The time-to-let is increasing (referring to the average duration a property is advertised before a suitable tenant’s offer is accepted), and the rents being agreed upon are decreasing. This indicates that property supply and tenant demand in the market are becoming more balanced than they have been for at least the past three years

GOOD NEWS FOR TENANTS?

This is undoubtedly positive news for anyone seeking a rental property, especially when compared to recent years when some tenants found themselves effectively locked out of the private rental market due to a lack of available properties. However, January and February are typically the slowest months in the Edinburgh rental sector, and as we move into spring, we expect the rental market to pick up again, resulting in shorter time-to-lets and rising rent levels.

It will be very interesting to see how the rest of the year unfolds.

THE HEALTHIEST PROPERTY SALES MARKET IN EDINBURGH WE’VE SEEN FOR YEARS

The 2024 Edinburgh residential sales market has swiftly gained momentum, and all indicators suggest that this is the healthiest market we’ve seen in several years. Stock levels are reasonable, providing buyers with ample choice, while monthly sales agreed are higher than in the last two years. There is clear confidence among both buyers and sellers, with evidence that the 4-5% mortgage rate range is not hindering improvements in market conditions.

STOCK LEVELS HIGHER THAN IN THE PAST TWO YEARS PROVIDE ABUNDANT CHOICE FOR BUYERS

The number of properties on the Edinburgh sales market so far in 2024 is 25% higher than this time last year and 123% higher than the same month in 2022. The first half of 2022 was a sellers’ market as it rebounded from the pandemic, leaving buyers with very few options and causing house prices to rise. Then, in 2023, following the infamous mini-budget and rising interest rates, buyers largely exited the market as their dreams of moving home were thwarted by high borrowing costs. This led to a slowdown in the market and an increase in the number of properties available for sale.

NEW INSTRUCTIONS AND SALES AGREED ARE HIGH

At first glance, these increased stock levels might seem concerning for sellers due to the abundance of choice for buyers. However, a closer look at the data reveals that this is not the case; rather, the market is performing better than it has in several years.

The number of new property listings on the Edinburgh market has risen, with 12% more homes added in February 2024 compared to 2022 and 2023. Conversely, monthly sales agreed are also up, with an 11% increase over the past two years.

NEW INSTRUCTIONS AND SALES AGREED ARE HIGH

At first glance, these higher stock levels may seem worrying for sellers due to the increased choice for buyers. However, a closer examination of the data shows that this is not the case; rather, the market is functioning better than it has in several years.

The number of new property listings on the Edinburgh market has risen, with 12% more homes added in February 2024 compared to 2022 and 2023. On the other hand, monthly sales agreed are also up, showing an 11% increase over the past two years.

These are positive indicators for the health of the property market in 2024. We anticipate that the number of monthly new listings and monthly sales agreed will continue to perform well in the coming months as buyers and sellers demonstrate their confidence in the market and future interest rate levels. Stock levels are likely to rise slightly as we enter the spring market, a period when buyer and seller activity tends to peak. Zoopla forecasts that 2024 will see a 10% increase in the number of properties bought and sold compared to 2023. With a reasonable selection of properties available for buyers, alongside increased buyer activity compared to the past couple of years, we expect a significant volume of transactions this year, although with minimal house price growth. This represents a much healthier housing market, characterised by a better balance between the number of homes for sale and buyer demand, resulting in a more predictable landscape for everyone.

While Edinburgh’s rental market remains competitive and prices continue to rise, there are efforts to address some of these challenges. The Scottish government is exploring options to make housing more affordable, which could impact rental prices and availability in the longer term. Additionally, ongoing investments in Edinburgh’s transportation and infrastructure are likely to open up more neighbourhoods for renters who are willing to consider areas further from the city centre.

As we move further into 2024, prospective tenants in the Edinburgh rental market will need to stay agile, researching available options and acting quickly to secure their ideal property. For landlords, Edinburgh remains a lucrative market, with steady demand and opportunities to enhance properties with sustainable features.