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'Hype' should ease pressure on government

Rent control warning as letting costs tumble

The latest returns from Scotland’s rental market prove the inadvisability of introducing rent controls, according to the country’s largest independent letting agency.

Having broken the £1,000 barrier for the first time earlier this year, the average monthly cost of renting a home privately in Edinburgh fell back to three figures during the autumn months.

The statistics were provided by DJ Alexander, which reported an average monthly rent in the capital of £1,011 a month for the summer edition of its quarterly Rental Tracker, covering the months of June, July and August. However it has just been revealed that the figure has fallen to £961 in the following three months.

The company has approximately 5,500 properties under management, mainly in Edinburgh and Glasgow.

According to Rob Trotter, the company’s senior property manager, the figures should reduce the pressure for the Scottish Government to introduce rent controls.

He said: “There has been a lot of hype about people being priced out of the rental market but it appears this has been over-egged. The rents of two-bedroom flats – the most popular type of private rental property in Edinburgh – are less than 2 per cent higher than they were a year ago.

“Of more concern for those seeking accommodation is that rental costs of three-bedroom, family-type houses have gone up by around 25 per cent.”

Currently the average rent for a three-bedroom house in a popular suburban district of Edinburgh is £1,232 a month.

Shortage of family homes

Reducing stock was largely responsible for the sharp rise in house rents, Mr Trotter said. “’Reluctant landlords’ (a term used to describe owner-occupiers who let out their unsold homes) have been finding buyers on the back of an improving sales market, leading to less homes available to let.

“Less stock inevitably leads to higher rents,” he continued. “Rent controls will result in more landlords selling up and therefore only exacerbate the problem. It will also stifle any new investment from would-be landlords or institutions. I appreciate the Scottish Government’s concern over rental levels in some quarters but the way to tackle this is to encourage more properties to be made available for rent.

“That the rental costs of two-bedroom flats have risen by a narrow percentage is precisely because a good choice currently exists, although even here rents will start to accelerate if more properties of this type do not become available.”

Glasgow fares better

Commenting on the Glasgow figures, David Mooney, the firm’s Regional Manager, Scotland West, said: “These returns are very encouraging, both in terms of the volume of lettings and higher rental rates, which hopefully will encourage the creation of more property to rent in and around the city.

“Glasgow enjoyed a very positive image from the worldwide coverage of the Commonwealth Games and to some extent this may have been responsible for the uplift in demand and rental rates.”

The latest Tracker gives an average rental figure of £894 per month for two-bedroom flats in Glasgow compared to £850 approximately six months ago. The average monthly figure, based on all new leases taken out during the quarter, is £859

Meanwhile, back in Edinburgh DJ Alexander has rented a seven-bedroom detached villa for £5,000 a month – thought to be a record for an individual residential property in the capital.

Mr Trotter added: “It is sometimes all too easy to look upon high rents as a negative thing. However this lease – to a software entrepreneur – could be seen as a vote of confidence in the capital and its economy.”

 

DJ Alexander Tracker – Autumn 2014 (1 September to 30 November)

Average rentals on new leases signed during the period

 

EDINBURGH

Flats

One-bed   Two-bed               Three-bed     Four-bed     Five-bed

£692           £897               £1221             £1731         £2166

Houses

Two-bed       Three-bed     Four-bed   Five-bed     Seven-bed

£996               £1232               £1459          £1909             £5000

 

GLASGOW

Flats

One-bed         Two-bed         Three-bed       Four-bed   Five-bed

£649                   £894                 £1078               £1270       £2000

Houses

One-bed       Two-bed         Three-bed   Four-bed      

£650               £995           £975               £1370

 

*Rental figures rounded up to the nearest £1.

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