Latest findings from lettings portal Citylets suggest the Scottish private rental market has almost doubled in size in less than five years.
Figures in the company’s latest Quarterly Report show growing numbers of Scots are now renting homes.
“Increasingly agents are telling us that larger numbers of people are choosing to rent a home for the foreseeable future, and that this is not a short term commitment,” said Dan Cookson, senior analyst at Citylets.
“What our latest figures show is that talk about ‘Generation Rent’ is absolutely right and this now looks like a significant and long-term shift in the housing market.”
In the latest report, covering April to June 2012, Citylets has published its ‘Volume Index’ for the first time, showing how the number of lettings has increased in recent years.
Cookson said: “We’re comfortably the biggest letting portal in Scotland and by analysing our volumes it’s clear the number of lets we process all but doubled since the beginning of 2008.
“There wasn’t any doubt the market had grown in that time, but even we were surprised when we looked at the figure in detail and found we were actually talking about a 98% increase.”
The most recent Scottish Household Survey for 2010-11 showed there are now 273,000 privately rented homes in Scotland, and it is gaining fast on the 275,000 properties rented through housing associations and not far from the 320,000 properties owned by councils.
The same research also found that the proportion of young person households (19-24) in the private rental sector is now 49% – while a report this month from analysts at PwC said most single people without financial assistance will be into their 30s before they can consider buying a property.
Cookson says the healthy state of the private rental market is being sustained partly because the majority of landlords are keeping rents at reasonable rates, rather than trying to cash in on the high demand.
According to the latest report, average rents in Scotland during Apr-Jun 2012 increased just 1.4% on the same period in 2011 – reaching £672. Meanwhile the average Time to Let (TTL) – the best available guide to demand in the rental sector – has risen by one day to 39 days.
Cookson said: “It may be that some people are only reluctantly part of ‘Generation Rent’ because they can’t get a mortgage or afford a deposit. It’s also the case that many landlords are renting properties which they are unable to sell.
“Whatever the reasons, our latest report makes positive reading for anyone involved in the sector. Landlords are seeing fewer voids, tenants are getting fair deals on rents and letting agents are keeping busy. All in all it is a healthy market.”
According to the latest Citylets figures, Aberdeen continues to see the most expensive prices in Scotland, with average rents in the city rising 4.5% year-on-year because of the ongoing demand for rental properties thanks to the booming oil and gas sector. Meanwhile, the time to let (TTL) figures for Aberdeen decreased year on year from 32 days to 21 days.
A three bed flat in the city now commands an average rent of £1,225, an 8.1% increase on the same period last year. Aberdeen’s two bed rents rose slightly to an average of £827, an increase of 3.4%, while one bed rents rose by 3.6% to an average of £576.
In Edinburgh there was a 2.9% increase in the average monthly rent. Two bed properties now average £718 per month, a rise of 2.9%. Meanwhile the average TTL for two-bed properties increased by five days, to 35 days. Average rent for four bed properties in the capital rose to £1,436, a 3.2 % increase.
Rents in Glasgow saw minimal increases, with one bed rents rising 2.4% to £468 on average while two bed rents rose by 2.0% to £614. TTL figures in Glasgow also lengthened with three bed rents experiencing the biggest increase from 40 to 46 days.
Dundee remains the most affordable city in Scotland with rents for two bed properties standing at £522, down by 0.8% on the same quarter in 2011.
Cookson said the booming rental market is facing up to a series of major changes and added: “We’ve seen the introduction of the Tenants Deposit Scheme and tenant information packs are on the way.
“Meanwhile we’re also seeing changes in the HMO regulations in Edinburgh, which is Scotland’s biggest rental market. All in all it is a fairly turbulent time and we are watching carefully to see what all of this may mean.”