Just like London, it has become near impossible for first-time buyers to get a foothold in Edinburgh writes Scott Macnab
It always saddens me when friends and colleagues in London ruefully admit there is no prospect of them ever settling down, maybe starting a family, in the UK capital.
It’s not that they don’t like the place, they usually love it. But despite often being nominally well-paid professionals, working in PR or government, the cost of property is so expensive that getting on the ladder will always elude them – and moving elsewhere in the country is the only option.
But is Edinburgh now heading the same way?
Soaring property prices show little sign of easing up in the Scottish capital. And moves are now afoot to introduce New-York style rent controls to alleviate the knock-on cost hikes.
The problems in the Scottish capital are well-documented with the explosion in recent of years of websites like AirBnB, among others, helping to fuel the rise in the “party flat” phenomenon.
A friend of mine living in central Edinburgh was telling me during the recent Edinburgh festival that his was the only flat in his close – of eight – which wasn’t an “AirBnB” being let out on short-term basis. Often, not always, it means groups of revellers rolling up to make hay over a weekend. Great fun for them, not so good for the poor residents forced to put up with the racket week after week. And this isn’t unusual.
Now Green councillors in the city say it’s time to act and say the city should become the first part of Scotland to take advantage of new laws which allow rent increases to be capped at inflation plus 1 per cent. This comes against the backdrop of a soaring rise in the cost of accommodation lets in the capital. Since 2010, the average cost of a two-bedroom flat has jumped by 40 per cent, according to a report released by the Greens, and stands at £928 per month.
For someone on their own, perhaps trying to save for a mortgage, a one-bedroom flat will cost about £705; possibly more, in the rental hotspots.
And all the projections indicate these inflation-busting rises are poised to continue in the years ahead. Pay packets certainly aren’t keeping pace, with average weekly incomes having gone up by less then 10 per cent since 2010 and now standing at about £535 at week. And all this at a time when workers have been subject to pay freezes, council tax is on the rise, the cost of goods in our shops is increasing and pension contributions are also going up.
Edinburgh has always been an international capital in the truest sense, a cosmopolitan melting pot which attracts people from all over Scotland, and the wider world. The ever-growing popularity of the Fringe and its sister arts festivals, the Hogmanay celebrations and the burgeoning university sector has made it more popular then ever as a place to stay.
That’s undoubtedly a good thing. But it means that the demand for places to stay has outstripped the supply of housing available. Alongside this, the great financial crash of a decade ago, which was essentially brought about by the collapse of the sub-prime mortgage market, has drastically altered the housing make-up in Edinburgh and across Scotland. New hard-line lending restrictions were imposed by edgy watchdogs anxious to avoid a repeat of the failures which brought the system crashing down.
But it made life difficult, if not impossible for young Scots trying to get a mortgage and set out on the property ladder as five-figure deposits suddenly became the norm.
It meant that people increasingly turned to private landlords for somewhere to stay. This used to account for about 13 per cent of all homes in the capital in 2001, it now makes up about a third – that means they house about 140,000 capital residents. Social housing, by contrast, has slumped over this period. It once accounted for about a third of all homes in Scotland, but fell away to fewer then a quarter by the mid-2000s and has remained there ever since.
It’s hard to see how this will change any time soon. The Scottish Government recently announced plans to deliver 35,000 homes for social rent, within the next four years, but this will require a near doubling of the completion rate because on average just 6,800 affordable homes have been completed annually in the past five years.
The explosion in student accommodation, which we’ve seen around Edinburgh and other parts of Scotland in recent years, has also done little to help the situation. Students can pay in the region of £600-800 a week for these properties depending on how long they stay.
The Granton Waterfront area to the north of the city has long been held out as a great panacea for the city’s housing problems, but proposed developments have fallen by the wayside amid concerns among developers over the cost of contributing towards infrastructure in the area such as streets, schools and doctors surgeries.
The feeling among Scotland’s landlords is that rent control zones will not address the key issue here – that there simply aren’t enough homes across Scotland. Supply is outstripping demand and pushing up prices.
It may even be that Edinburgh is not the first part of Scotland to act, with councillors in Glasgow having already approved a report into the prospect of rent pressure zones last month – the city has seen a 34 per cent increase in rents over the past five years. And even though Aberdeen rents have tailed off in recent years as a result of the oil price crash, councillors in the area are nonetheless also looking at the measures.
The Scottish Government certainly realises there is an issue here. John Swinney, in his last Budget as finance secretary two years ago, introduced a three per cent levy on people buying second homes and buy-to-let landlords. The Deputy First Minister said he was “conscious of the issue of second homes”, as he addressed MSPs. He added: “We need to ensure that the opportunities for first-time buyers to enter the market in Scotland are as strong as they possibly can be.”
But young workers now increasingly struggle to find a way on to Edinburgh’s booming property market where homes cost more than six times average wages. The tragedy would be if this new “Generation Rent” resigns itself to a life outside the city, just as we see in the English capital.