News and Press releases

Rentals defy the property gloom

03/10/2010

DEMAND for rental properties is reaching unprecedented levels in Scotland as first-time buyers abandon their bid to get on the property ladder, experts claim.

But concerns have been raised regarding the implications of the trend for the wider housing market as a shortage of properties to let drives rental prices upwards and prompts new fears of a lack of supply in the private rented sector.
The Royal Institution of Chartered Surveyors (Rics) has reported increased demand for rental property in Scotland in recent months. The rise coincides with a fall in the availability of letting properties, with prices up for three successive quarters. The same is being reported in England and Wales, where average rents have reached their highest level for two years as increased demand from tenants reluctant or unable to buy pushes prices upwards.
The Council of Mortgage Lenders revealed recently that the proportion of loans taken out by first-time buyers is at the lowest level since before the credit crunch. And the Financial Services Authority is consulting on measures that could further restrict access to mortgages, including steps that would herald the demise of interest-only mortgages and even a cap on loan-to-value levels that experts claim would be fatal for the first-time buyer sector.

It all adds up to an outlook that has prompted the Chartered Institute of Housing to predict the end of a “golden era of home ownership”.

David Alexander, owner of Glasgow and Edinburgh letting agent DJ Alexander, said demand has never been higher in his 28 years in the industry. Similarly, John Hards, co-managing director at Countrywide residential lettings, described the number of tenants entering the market as being at unprecedented levels, while John Heron of Paragon Mortgages claimed the UK was “entering the age of renting”.
Higher demand is also a product of the economic downturn, with low wage inflation and rising unemployment encouraging single couples living separately to move in together to save money. And it’s not all about single-person households, according to Alexander, who said families are accounting for a growing proportion of the rental market.
The vast majority of rental accommodation in Scotland is offered on a short assured tenancy basis with a minimum stay of six months and contracts then continuing on a rolling monthly basis. The flexibility is popular among both landlords and tenants, although there is nothing to prevent landlords from offering long-term leases.

SCOTLAND ON SUNDAY (News Section), 3 October 2010

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