Rental Market update q1 2025.

Rental Inflation starts to cool…

Its all change in the Edinburgh rental market - stock levels have risen sharply over the the past 3 months and after three years of depleted stock against rising numbers of rental enquiries we are now encountering a period of increased supply of properties which is having a welcome effect of cooling rental inflation (reassuring for tenants at least!)

Citylets data shows that, for the last three years, the number of rental properties available on the market in Edinburgh on Rightmove has not surpassed 1,000 at any given time. That changed on November 8, 2024, when the available stock exceeded this threshold. But between September 2024 and January 2025 we have seen a massive 35% increase on new properties coming to market. Couple this with a slowdown in prospective tenant enquiries, and for the first time in years, tenants are in the driving seat with more properties to choose from, ad as a result zoopla’s q4 2024 data shows that Edinburgh’s annual rental inflation has dropped to 4.8%.. (source Umega Lettings and Citylets data 2025)

This ‘normalising’ of the rental market means we are no longer experiencing uncharacteristically high amounts of enquiries during the winter months, but rather, a return to a more seasonal property market. Indeed as the year picks up pace the rate of new enquires in both rental and sales markets is increasing exponentially. We would expect a more balanced market as the year evolves, and demand for properties rises towards the summer.

For sure, a market correction was necessary to the Edinburgh rental market, but the recent rises in rental figures against a more subdued sales markets mean that expected yields for landlords are comfortably 6% plus in the rental hotspots of central Edinburgh. Which is good news for investors in the wake of higher interest rates.