Home rental costs 'will keep climbing'

The cost of renting a home in Scotland will continue to rise as property sales slump and the supply of rental accommodation shrinks, a report out today warns.

The average monthly rent in Scotland was 2.2 per cent higher in the final quarter of last year than in the same period in 2009, despite a drop-off compared with the previous three months, the latest Citylets figures show.

And with Scottish house prices still falling, rents are likely to continue going in the opposite direction, said the property listings website.

The upward pressure on costs is exacerbated by a supply shortage, with concerns growing over a significant drop in the past two years in the number of new builds in Scotland. Dan Cookson, senior analyst at Citylets, said: "Scottish house prices fell by 2.4 per cent in the comparable period, according to the latest figures from the Department of Communities and Local Government. While these changes in rent levels and house prices are not dramatic in themselves, they do suggest a more positive outlook for rental yields going forward."

The biggest price increase last year was in Stirling, where the cost of the average two-bed flat jumped 15 per cent, from 530 to 611. Increased demand also reduced the time it took to let out vacant properties. The average time-to-let (TTL) for a one-bed flat in Edinburgh fell by five days to 23 days last year. Almost a quarter of one-bed properties in the capital were taken up within a week of being advertised.

Scotland's average TTL was 35 days in the final quarter, down from 41 at the start of the year.

Cookson said: "The steady improvement in TTL over the last two years suggests that much of the sudden additional supply of rental property from 'reluctant landlords' in 2008-9 has been taken up."

The most expensive area in Scotland for renting a two-bedroom flat is Aberdeen's West End, where the average cost of 928 is more than double the 433 average in North Lanarkshire.