First-time renters in Scotland face soaring costs as the supply of rented accommodation continues to contract, a report out today warns.
In a trend echoing the problems faced by first-time buyers, rising demand for rental property is driving prices up and making it increasingly difficult for new renters to secure the accommodation they need.
The average rental price for a flat in Edinburgh has jumped by 5 per cent in the past three months alone, according to the latest rental tracker report from letting agency DJ Alexander.
It warned that rents would keep rising as demand continues to outstrip supply in the capital and beyond. A shortage of stock to let is being exacerbated by an ongoing lending squeeze that means existing tenants are renting for longer.
With first-time buyers still struggling to secure mortgages, tenants are increasingly likely to renew their rental leases or move to other rented accommodation, the report found.
As supply has shrunk, landlords have been able to push up the rental prices they charge – and they’re likely to continue doing so over the coming months, it warned.
Not only are tenants extending existing leases, but as they stay in the market longer they’re now more likely to move to other rented properties when they move, instead of seeking to buy.
“This is due to various lifestyle reasons, such as a need for more space, being closer to one’s place of work or simply a desire to live in a favoured location,” said David Alexander, owner of the letting agency.
Rival letting agency Braemore has reported a similar pattern and also expects rents to climb higher. Colette Murphy, director at Braemore Property Management, said: “We already have a situation where first-time buyers are finding it increasingly difficult to get on the property ladder, so they have become reluctant tenants and will remain so for longer.”
The typical letting period has increased from 15 to 22 months in the last couple of years, said Colette Murphy, while prices have risen by £15 to £25 a month in just the past few weeks.
Demand for rented accommodation in Edinburgh is significantly greater than supply in the most popular areas, with rents rocketing in areas including the city centre, Comely Bank and Marchmont.
With both Murphy and Alexander expecting the rental sector to remain buoyant for some time to come, tenants face further increases in costs, putting some at risk of arrears.
Those increases may be fuelled partly by the impact of the Scottish Government’s new tenant deposit scheme, which came into force in July and becomes mandatory for landlords next month.
The scheme is expected to add to the costs incurred by landlords, who may well pass them on to tenants in the form of rent increases.
The typical rented flat in Edinburgh now cost £848 a month, with the average one-bed flat priced at more than £600, the latest DJ Alexander tracker shows. Rental prices for two and three-bed flats in the city averaged £765 and £1,147 a month respectively in the three months to the end of September, while houses averaged out at £1,293.
Tenants in Glasgow paid an average of £762 a month over that period, with one and two-bed flats priced at £545 and £772 respectively.
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Weather for Edinburgh
Saturday 18 May 2013
Temperature: 9 C to 13 C
Wind Speed: 18 mph
Wind direction: North east
Temperature: 9 C to 18 C
Wind Speed: 8 mph
Wind direction: North east