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Tenants in Scotland will be given greater security than those in England as sweeping reforms come into force. The new tenants’ rights have been welcomed by housing campaigners. The most significant change is that anyone starting a private let will also sign a private residential tenancy which gives much-improved rights to renters. This tenancy gives them notice periods that are longer and greater security of tenure, which means landlords have to give a good reason for ending the tenancy. This means that no-fault evictions will come to an end, and rent rises are limited to once every 12 months. A new specialist tribunal will hear any disputes between landlords and tenants, while letting agents will have to register and work to a code of practice.

The private rental sector is increasing rapidly in Scotland. It has risen by one-third in the past 20 years and now makes up 15% of homes. In England, the private rental sector has risen from 10% in 2002 to 19% today. The social rental sector has fallen to 17% of households – it was 31% in 1980. The rental sector is expected to grow further as more people are priced out of the property market or choose to rent because they do not want to commit to a lifetime of mortgage repayments or living in one place.

The news comes as the latest Your Move buy-to-let index shows rental price growth in Scotland continues to outstrip the rest of the United Kingdom with an annual rise of 2.5% in October. The average rent in Scotland is £572 a month now. Rents remain much higher in England at £845pcm, but the average year-on-year rise for England and Wales is 2.4%. The highest growth in Scotland was in the Highlands & Islands region, where prices rose 6.4% compared to last year with an average rent today of £613pcm. According to Your Move, properties achieved an average yield of 4.8% in Scotland, while the average across England and Wales is 4.4%.

Investing in buy-to-lets north of the border is looking increasingly attractive, particularly as property prices remain reasonable in Scotland. Edinburgh, in particular, is seen as a top option. Its elegant historic properties and good quality of life are obvious charms. Also, the difference in property prices between Edinburgh and London is at its highest for 20 years, according to Hometrack. The average price of a property in Edinburgh is £206,000 and achieved 5.4% growth in the past 12 months, while the average in London is £492,000 with 3.3% growth in the same period. Charles McCosh, who is a valuer at Rettie & Co in Edinburgh, said many people are looking to rent because of a lack of properties for sale. He felt one- and two-bedroom flats make the best investments because they appeal to many different types of tenants. Landlords will need to be aware of safety legislation for properties, including a Legionella risk assessment, energy performance certificate, portable appliance test and an electrical installation condition report. But it could be worthwhile investing in the Scottish rental market because of the more attractive prices and yields.

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