Housing shortage ‘fueling rental costs’

The lettings market in the Capital is at breaking point after the cost of renting ROSE by more than a quarter in the last five years.

The cost of renting is on the up. Picture: Callum Bennetts
The cost of renting is on the up. Picture: Callum Bennetts

The crisis has been blamed on an “acute shortage” of housing which has seen demand outstrip supply, forcing up prices across the city.

Bosses at DJ Alexander believe the market cannot cope much longer, and have demanded Scottish Government action to offset the rises.

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Since the lettings firm launched its quarterly Rental Tracker five years ago, the cost of renting a one-bedroom flat in Edinburgh has risen by 
27.6 per cent and two-bedroom flats by 21 per cent.

The monthly rentals of one-bedroom flats have risen from £560 to £715 in Edinburgh and from £509 to £624 in Glasgow.

For two-bedroom flats the figures have gone from £735 to £893 in Edinburgh and from £783 to £925 in Glasgow. A one-bedroom flat in Edinburgh now costs £1860 a year more than in spring 2010.

David Alexander, managing director of DJ Alexander, said most decent landlords wanted to keep rent increases to a minimum. He said: “There is no point in increasing rent so much that a tenant is not in a position to pay it – this is like killing the goose that lays the golden egg. But not enough housing is being built. The private rental sector is taking a fair bit of the slack but demand is outstripping supply.

“This is an ideal opportunity for the Scottish Government to make it attractive for private institutions to invest in the rental sector.”

Rob Trotter, Business Development Manager at the firm, stressed that rental costs were still within reach of most tenants in regular employment.

But he added: “Our Tracker has recorded a rising graph in the cost of renting over a five-year period and the market just will not have the supply to cope with the level of demand for very much longer. Even now, most well-located properties are renting within days rather than weeks. Only those in undesirable locations, or which could do with upgrading or refurbishment, are sticking for any length of time.”

Mr Trotter said the rental stock could be increased through more ‘buy to let’ purchases or larger development schemes financed by banks, insurance companies and pension funds.

He said: “It is essential that the market is in a position to meet the growing demand from young single people and recently-married couples. As for the effect on rents, these might not fall, at least initially, but they certainly would not rise to the extent they have done over the past five years if more units were to become available.”