CHAPMANS' RESPONSE: Citylets Quarterly Report Q1 2021

We welcomed the arrival of the recent Citylets report on the PRS in Scotland for Quarter 1. We were keen to understand if our experiences within our agency and our predictions were indeed reflected across the board in Edinburgh but also to see signs of optimism in what has been a challenging marketplace.

We had anticipated a drop in rents and an increasing time to let for our stock in Edinburgh and we were pleased that our internal assessments of a potential average drop of 10%, were not fully realised – (net drop of 6.9%). On average we have outperformed on the reported market average time to let for our properties – 28-34 days across 1,2,3 and 4-bed properties. We certainly saw a positive bounce mid to end February when the roadmap out of the pandemic was announced and more optimism returned. Where we normally re-let a property with just a 4 day gap between tenancies this did increase to between 6-10 days (sometimes to secure the best possible tenant who had notice to give etc), however, this is starting to shorten again. Stock levels are still high though and we are working as hard as ever to ensure our properties stand out in a crowded market.

While a drop in rental values is certainly not welcome news we were pleased to see the drop was less than anticipated and we feel that is largely due to the clear roadmap out of the pandemic announced by Westminster and the Scottish Government and the wonderful efforts of the NHS and vaccine distribution. This is all leading to real signs of optimism and desire in the community to get back to normal and get people back into work – whether fully office-based or a blended mix of home and office-based working. We feel this continued move down the tiers and opening up of offices and leisure spaces will help our 1 and 2 bed properties, as people once again welcome the opportunity of living in our vibrant capital city with its wonderful restaurants, nightlife and leisure opportunities and the chance to get back to the office and have a distinction between their home life and work life. There will be a more muted Edinburgh festival this summer and there is an increased demand for safe staycations and so we may see some 1-2 bed stock return to the holiday let market if those incumbent tenants give notice in good time. However, we feel the shift to the long-term sector may remain for at least another year or so with some of those new entrants remaining permanently in the sector as owners realise the benefits of longer-term tenancies; less wear and tear and less fluctuating income streams. 

We still see continued demand for larger properties with outdoor space. Three bedroom non HMO flats are proving popular with the third bedroom often utilised for a home office as tenants save some commuting costs and are therefore investing in a bigger property allowing a better home/work balance. We feel this trend will continue, as even though tenants will be starting to go back into offices, a blended mix of work locations will still help tenants save some commuting money and allow them to reinvest this in a bigger property.

We also see renewed optimism that the HMO sector will recover further, albeit we are yet to see how easy it will be for international students to fly into the country. While we see occupancy of these properties improving there will be rent negotiations carried out behind the scenes and landlords will need to be prepared to offer discounts for the summer periods in order to secure good longer-term tenants. With the vaccine rollout gaining pace worldwide we are however far more optimistic than last year for this sector of the market as a whole. We are heartened also by the fact that all our 4 bed HMOs are all achieving well in excess of even the peak average rent for the sector by over 20%– suggesting that we are outperforming the market by some margin.

We look forward to the next report but while it is great to look back and carry out a vital sense check, we will continue to work extremely hard chasing down all leads and elevating our properties above the competition. We are fully focused on keeping incumbent tenants happy and excited to be getting back in renovating and inspecting our properties and carrying out needed repairs and maintenance now we are permitted to do so. 

Laura Chapman

Director

Chapmans  (LARN1812036)