Rental levels are surging as people put off buying

TENANTS in Scotland face rising costs as demand for private rented homes continues to soar.

The average rent in Scotland has reached its highest level since the banking crisis began in autumn 2008, according to the latest quarterly update from Citylets, the lettings website. And with no sign of tenant demand easing, with many still frozen out of the housing market, costs are set to carry on climbing.

Rents in Scotland have gone up by 1.4 per cent in the past year to an average of 663, the highest since the third quarter of 2008, the lettings portal reveals today. Its report, covering the three months to 30 June, also shows that the average time it takes to let out a property has fallen as demand has intensified.

Just over half of rented properties took more than a month to let during the second quarter, marginally down on the same period last year. But the time it took to fill the average two-bed flat - the most popular type of rental property - fell to 38 days, down from 42 days in the first three months of the year.

Dan Cookson, senior analyst at Citylets, which bases its data on over 50,000 annual lettings from agents across Scotland, said: "The rental market in Scotland is still performing well, with rents rising steadily in every city and properties being let more quickly than they were earlier in the year. It's clear that the demand for rented accommodation across the country is showing no signs of slowing down any time soon."

Cookson reported a marked shift in attitude towards property as more people opt to rent for longer.

"Many would-be homebuyers are being thwarted from purchasing a property of their own, due to tight mortgage restrictions and the need to save up a big deposit, so they are shunning the residential sales market altogether in favour of renting a home instead.

"This 'Generation Rent' attitude is creating an ongoing boom in the lettings sector, with rented homes proving popular across the whole country. There is still high competition among tenants for good quality homes, and this is being reflected in the fact that rents are rising and the time taken for properties to let is falling," said Cookson.

The report comes a week after letting agent DJ Alexander said demand for rental property in Edinburgh had reached "unprecedented" levels. Citylets reveals that average rents in the capital rose by 1.9 per cent to 769 in the last quarter, with the average two-bed flat now costing 698, up 2.6 per cent from a year ago. Edinburgh rental prices have gone up by almost 7 per cent in the past two years.

There was a similar trend in Glasgow, where average rents for two-bed flats in have breached the 600 mark for the first time.The cost of rental accommodation has fallen slightly in Aberdeen, although it remains the most expensive city in Scotland for private rented accommodation. Two-bed flats in the Granite City now fetch an average rent of 800, up 1.3 per cent in the past year.