Scotland is undergoing a major cultural change as tighter restrictions on mortgage lending force people out of home ownership and instead into European-style long-term property renting.
According to the country’s leading lettings portal Citylets, an increasing number of people in Scotland are choosing to avoid the property sales market in favour of the continental model of renting a property for the long term.
The trend is identified in the latest Citylets quarterly (July-September 2010) data report – the most comprehensive barometer of Scotland’s rental market – which shows unprecedented demand for private rented accommodation.
The report shows that although the average monthly rent in Scotland during Q3 2010 was £649 – a modest 1.4% increase on the same period in 2009 – the time taken for properties to rent has fallen dramatically due to increased demand among tenants. The average 1 bed property in Scotland now takes 33 days to let, while 17% of all new properties are now being let within a week of being advertised.
Citylets says these factors and that fact that it has also experienced record visitor numbers over the past three months, provide further proof that long-term renting is becoming increasingly popular across the country.
Dan Cookson, senior analyst at Citylets, explained: “It appears that there has been a growing trend in the property market towards rentals, which are now proving more popular than ever. Long term renting is becoming a lifestyle choice – similar to the scenario in mainland Europe – with many people happy to stay in the lettings sector rather than having the hassle of owning a property.
“Even in those cases where people do want to own their own home, many of these would-be buyers are finding that they cannot afford the necessary deposits to purchase a property because of restrictive mortgage lending criteria – so they are left with no choice but to rent.
“Until fairly recently, renting a property was seen as a short to medium-term choice that people would choose before they finally settled down and bought a home of their own. Nowadays, however, people are renting properties for longer – and many tenants are viewing their rental flat home as the place they will live for years to come.
“The challenge for the sector will now be meeting this growing demand for rented accommodation in Scotland.”
www.citylets.co.uk was launched in 1999 and is Scotland’s most successful lettings portal. Its quarterly report is the country’s only detailed and independent barometer of the rental market, based on over 50,000 annual lettings from more than 300 agents. It is now a respected tool among investors, landlords and letting agencies.
The latest Q3 report shows that rents continue to remain stable across Scotland’s three biggest cities.
In Edinburgh, the average rent for a two bed flat in the city now stands at £681, a rise of 3.2% on Q3 2009. The average time to let figure – a key indicator of demand for the private rental sector – currently stands at 31 days.
In Glasgow, the average rent for a two-bed flat is now £582 – a modest rise of 0.9% on Q3 2009 – while the average time to let figure stands at 37 days.
Aberdeen remains the most expensive city in Scotland to rent property, with the average rent for a two-bed flat in the city now standing at £791 – a rise of 3.3% on Q3 2009. The average time to let figure in the city currently stands at 34 days.
Dan Cookson added: “Although rent levels are fairly stable at the moment, it is likely that they will increase in the future. With an increasing dependence on the private rented sector to meet Scotland’s housing needs, there will inevitably come a point when this higher demand will lead to rent increases.
“Affordable buy-to-let finance is still hard to find and there is a limited capacity for growth among the majority of existing landlords. Therefore, it’s unlikely that the supply of private rented sector properties will increase in the near future – which makes it likely that pressures on rents will increase in 2011.
* A copy of the report is available online at www.citylets.co.uk/reports