DEMAND for rental accommodation in Scotland has reached unprecedented levels as home ownership loses its lustre, it has been claimed. David Alexander, owner of DJ Alexander letting agents, believes Scotland is showing signs of becoming a nation of tenants again, with demand at its greatest in his 28 years in the industry.
That demand has helped drive a resurgence in the buy-to-let market, with the Council of Mortgage Lenders this week reporting a 12 per cent increase in buy-to-let lending in the three months to the end of September, with 26,900 new loans given for buy-to-let property.
Ray Boulger, senior technical manager at broker John Charcol, expects the trend to continue. "People are having to rent for longer and the proportion of people who want to buy but can't means rental demand is bound to increase," he said. "So we'll see more landlords coming back into the market and lenders are once again offering deals at 80 per cent loan-to-value."
Nationwide's growing activity in the buy-to-let market has been a big catalyst for change, said Boulger, with the building society challenging Lloyds for the lion's share of new lending. "Nationwide is in a good position to beef up its buy-to-let book and earlier this year expanded the types of property it lends on," he said.
Demand for rental accommodation in Scotland is increasingly from families rather than the young singles and couples more commonly associated with the rental market, said Alexander. "Demand has become particularly strong for houses with gardens because of the growing numbers of couples with children who see no point in buying at present or who are simply unable to secure mortgage finance," he said.
And he believes house prices will need to fall significantly before that changes. "Over a period of 15 to 20 years capital growth is likely to only modestly stay ahead of inflation, which may encourage couples and families to rent their homes on a long-term basis and look for some other means of building up a capital surplus," said Alexander.