Relief for landlords as rents show signs of stabilising

RENTS in Scotland may have "bottomed out", the head of a major letting website claims today.

The latest quarterly report from rental website Citylets, published today, found the average rent throughout Scotland fell by 3.4 per cent year-on-year to 640 per month in the July to September period.

Today's figures mark the third consecutive quarter of falling rents, with the Scottish average having dropped by 3.3 per cent in the previous quarter and 1.1 per cent in the first quarter of the calendar year.

While falling rents come as good news for new tenants, the drop has put pressure on new landlords, many of whom are letting flats that they could not sell because of the credit crunch.

Thomas Ashdown, who runs Citylets, said: "We've seen a lot of volatility in the rental market in the past two years.

"First we had the credit crunch leading to a boom in rental demand as people couldn't or wouldn't buy. That saw prices rise. Then we had thousands of 'reluctant landlords' – those who couldn't sell putting homes up for rent – redressing the balance before inducing elements of over-supply, so putting a squeeze on prices.

"Across Scotland, rents are down but they are no worse than what they were in quarter two, providing yet more evidence of the stabilisation trend."

But the latest figures highlight different trends in different parts of the country. Ashdown warned that certain areas posted "some of the heaviest falls ever seen in rents year-on-year".

Aberdeen experienced the greatest changes in rental activity. One-bed flat rents fell 6.1 per cent, while two-beds fell 5.9 per cent, compared with last year.

In Edinburgh, rents for one and two-bed flats fell on average by 4.6 per cent and 7.7 per cent respectively, while Glasgow was not as badly affected, with rents for one-beds falling by 0.6 per cent and two-beds 2.6 per cent.

The average rent in Edinburgh fell by 4.3 per cent to 729, while Glasgow reported a 1.5 per cent fall to 584 and Aberdeen a 6.8 per cent drop to 830.

Ashdown said: "I think that we are now at the bottom of the curve, and with demand remaining strong and the housing market seemingly on a more even keel, it is likely we should be moving to a more stable rental sector in 2010."

Citylet's barometer records data from more than 300 letting agents that together rent out 50,000 properties.

• Demand for properties has outstripped supply in Edinburgh's "Letfirst" scheme, according to the firm charged by the city council with running the programme.

John Taylor, chief executive of Orchard & Shipman, said homes had been found for 62 people through the scheme – which offers homes to tenants without the need for a deposit or the first month's rent up front – but 250 were on the waiting list.