Renting at record levels as first-time buyers frozen out

Properties let within hours as demand outstrips supply

DEMAND for rental property in Edinburgh has reached "unprecedented" levels as would-be buyers remain frozen out of the housing market, it has been claimed.

However, the costs faced by tenants have been kept down by the increased supply of rental properties from homeowners who are moving on but unable to sell, according to the latest rental tracker from DJ Alexander, out today.

The letting and estate agent reveals that demand for rental properties in both Edinburgh and Glasgow has grown over the past three months, with dozens of inquiries for every two-bed flat becoming available.

The average monthly rent in Scotland's capital was 818 in the three months to the end of June, based on DJ Alexander properties, with the average house 1,189 a month to rent.

Two-bed flats, the most popular category, typically cost 761, down from 787 in the last three months of 2010. One-bed flats are the cheapest category, at 590 on average, virtually unchanged from the end of last year.

Rental properties in Glasgow cost an average of 748 to rent, with two-bed flats averaging 756, down from 763 in the three months to the end of 2010, and one-bed flats at 555. The average rental rate for a house in Glasgow was 823, with two-bed houses at 995.

David Alexander, owner of the firm, said that while June was typically a busy period as people put arrangements in place before the summer holidays, last month was the busiest on record.

"We were literally receiving 50 to 60 inquiries for every two-bedroom flat, which is the most popular type of property that comes on to the market - and each is usually let within a matter of hours," he said.

That demand came from a combination of the traditional source of upwardly mobile young professionals, plus a growing number of people who would otherwise buy a home but are forced to rent in the current slow housing market.

Yet tenants haven't seen costs rise significantly, despite a long-term shortage of affordable property supply. While fewer buy-to-let investors are making new properties available, there has been a steady rise in the number of "reluctant landlords" who have bought a new home but can't sell their existing one.

Alexander said: "The number of new properties being brought to the market by conventional 'buy-to-let' investors has become little more than a trickle, which in normal circumstances would have reduced supply and, by implication, led to a substantial increase in rental levels.

"However, rents are being kept in check because of the continual flow of properties being made available by conventional homeowners. In June, we received 49 new instructions, which was another monthly record."But the UK rental market remains under threat from an undersupply of decent property, a report out today warns. Research by the Association of Rental Letting Agents found that three-quarters of its members reported demand from tenants outstripping the supply of rental properties, up from just 10 per cent two years ago.

It called for government action to boost the number of homes to rent by encouraging greater investment in the private rented sector.