Private rental market stays buoyant as demand surges

PRIVATE tenants face further increases in prices as the subdued housing market fuels a rental boom in Scotland, according to a report out today.

Average rents in Scotland are now 3.2 per cent higher than a year ago, the biggest year-on-year increase since rental prices mushroomed in 2008, research by Citylets shows.

And with the average property being let within 38 days, the increase in demand for rental accommodation shows no signs of easing off. Private rented tenants in Scotland paid an average of £670 a month in the quarter ending in September, up from £649 in the same period last year.

Demand for rental accommodation has surged over the last three years as the housing market has slowed. And while there has been a modest improvement in mortgage availability in recent months, giving some hope to would-be buyers, evidence suggests that not only are more people renting, but they are doing so for longer than previously.

But the result is higher rental prices which, while being good news for landlords and letting agents, is making it harder for those on lower incomes to find private accommodation.

The Citylets study revealed that the average rent for a three-bed property in Edinburgh is now over £1,000, although Aberdeen remains the most expensive place to rent a home in Scotland.

One-bed flats now cost £544 a month in Edinburgh, on average, while three-beds are typically paying £1,008 a month, 4.1 per cent more than a year ago. The cost of renting a two-bed flat has risen 5.1 per cent to £720 over the last year.

The picture is similar in Glasgow, where average monthly rents for one- and two-bed properties reached £464 and £614 respectively in the last quarter.

In Aberdeen the average rent for a one-bed flat is now £572, up more than 3 per cent from a year ago. Two- and three-bed properties are renting out at averages of £812 and £1,147 respectively.

Dan Cookson, senior analyst with Citylets, said: “There’s no doubt that the rental market in Scotland is continuing to perform exceptionally well. Demand for accommodation is still extremely high and there are more properties coming onto the market, which is providing more choice for prospective tenants.”

Demand is rising steadily in all of Scotland’s cities, Cookson added.

“Renting is firmly established as a lifestyle choice now, rather than just something to do while you save up to buy a property of your own, and many tenants are happy to pay a good price for a good property in a desirable location.”

And Cookson predicted that demand could push rental prices up for some time to come.

“All the signs suggest that Scotland’s rental market is stronger than ever and the strong demand for rented properties shows no signs of abating any time soon.”

The figures support the most recent report from lettings agent DJ Alexander, which showed that the average rent for a flat in the capital rose by 7.5 per cent in the three months to the end of September. Costs in Glasgow were up 6 per cent over the same period.

David Alexander, owner of the firm, claimed a growing number of tenants are staying put for the long term.

He said: “The trend towards unfurnished rentals – with tenants choosing their own beds, sofas, etc – is another sign that a rented flat or house is becoming increasingly looked upon as a ‘home’.”