Flooded property market set to end Capital's rental boom

EDINBURGH'S rental boom is set to come to an end as homeowners who cannot sell flood the market with homes to let, experts warned today.

With more people trying to rent instead of buy as lending from banks dries up, there has been a big increase in demand for rental property in recent months.

And the increased demand helped prices rise by just under six per cent in the second quarter of the year.

But letting agents say that this winter will see more homeowners having difficulty selling their property and instead put it up for rent.

Steven Currie, joint head of Murray & Currie estate and letting agents, said: "In November and December, there will be a saturation of flats (to rent) as people can't sell.

"The market is great just now but there are hard times ahead and people need to prepare for that. People will be seeing what's going on in the property market and thinking of a plan B. That plan B is to rent."

Mr Currie, who runs the business with Richard Murray, said that those who want to sell a 200,000-250,000 two-bed home in an area like Polwarth are likely to get around 700-750 a month in rent – which in many cases will not even cover mortgage payments. But it allows them to hold on to the property and sell when the market improves.

However, he warned that rising demand makes it more difficult to get the top rents.

He said: "Just now, we (agents and owners) are in control but come November, December, January, the tenants will be able to play hard ball."

Thomas Ashdown, managing director of Citylets, which advertised more than 25,000 properties a year, said: "With the mortgage market effectively turned off like a tap there has been an instant increase in demand.

"But Colette Murphy, director at Braemore Property Management, had a warning over family homes. She said: "

Most families will look to secure a property before the school year starts, so we are past the peak time for this."