THE SCOTTISH rental sector is booming with rents reaching their highest level ever because of poor property sales and first time buyers struggling to afford their own homes, according to a new report out yesterday (tues).
The Quarterly Data Report from property firm Citylets revealed that the rental sector is performing remarkably well with rents still rising across the country and properties being leased to tenants faster than any other time in the last three years.
The average rent has increased by 2.2% to £644 over that past year and figures also show that it now takes an average of just 35 days to let a property – the lowest since the height of the credit crunch in 2008 when there was a surge in demand.
Rents in Edinburgh are also at the highest they have ever been with an average cost of £772 per month which is 5% more than last year.
Dan Cookson, senior analyst at Citylets, said that the figures showed that the private rental sector in Scotland was booming as people across the country choose to forgo the ongoing problems that are currently being experienced in the country’s property sales market.
He added: “There is still strong demand for rented accommodation in Scotland, and this is being shown in the fact that rents are continuing to rise and properties are being let out more quickly.
“One of the main reasons for this continued growth is the fact that many would-be property buyers are continuing to find it difficult to purchase their first home.
“Tighter lending and higher deposit requirements remain a huge problem for many people who cannot secure the necessary funds to purchase a property, so they are choosing to rent until they can make the step onto the ladder.
“However, these tighter mortgage restrictions have also meant that fewer investors have entered the market, so there is a limited supply of properties to match demand.
“This means that tenants are now in greater competition for rented accommodation – which in turn has driven up rents and has led to properties being rented more quickly than before.”
“It is interesting to note that in both Glasgow and Edinburgh the larger properties have seen the strongest growth. 3-bed properties rose by 9.8% in Edinburgh and 6.9% in Glasgow.
“This could be a function of more families considering rental as a long term option as ‘owner occupation’ doesn’t offer the attractions of strong capital growth it once did.”
The managing director of Edinburgh Mortgage Advice, Mark Dyson reviewed the report and said that a successful rental market can contribute towards boosting the sales market.
He said: “The housing market is driven by demand at the lower prices to allow chains to develop, strong demand from first time buyers and landlords looking for rental properties helps ensure that there is stock on the market that is moving.
“No demand at lower prices means people at all prices find it hard to move.
“So a higher income young family looking for the forever home needs someone to want what they have now and that starts with either a first time buyer or someone wanting to rent either for the long term or till they can afford to get onto the ladder.
“The thing I don’t see in the report is how the weather affected volumes, the number of lettings is not included in the report but it is inferred that this has increased.
“Both the weather and the volume of lettings could have a skewing affect on the results.
“The weather alone is mentioned in quotes twice as having a negative impact.
“The winter quarter normally has a low volume of lettings, if this is then hit further by the weather then this can have make it difficult and dangerous to read long term trends from the data.”
Kevin Hamill, 25, is a case manager for a mortgage broker in Dundee and discovered that it was cheaper to buy is first home through a shared equity scheme through the company Home Scotland than to continue renting.
He said: “I am now living in a shared equity property where I’ve been for one and a half years after getting a great deal.
“We looked at a place we thought was well outside our budget at £120,000, we had no savings and couldn’t afford a mortgage.
“Home Scotland paid 40% of the purchase price and we paid 60%. Because I was borrowing a lot less I was able to get access to some really good deals and pay less interest.
“I calculated that it was a lot cheaper for us to buy our house than to pay rent.
He added: “It means absolutely everything. I have a garden for my son to play in and a three bedroom house.”
Kirsty Topping, 25, lives in Strathkinness in Fife, has been forced to live with relatives because she simply cannot afford to buy.
She said: “After studying in Edinburgh I’ve been forced to move back to my grandparents in Fife. On my graduate salary I have no hope of getting a mortgage on my own and if I was renting I wouldn’t be able to save for a deposit.
“The average house price is no longer three times the average salary.
She added: “The one upside to my living arrangements is that I can keep an eye on, and help out, my grandparents.
“Realistically I can only hope to afford a home if I inherit anything from my grandparents. It’s not a nice thing to think but its true and they agree with me.
“I’d rather have them than money at the end of the day.”