Scots opt to rent rather than buy in current credit climate

Strong evidence is emerging that Scots are opting to rent rather than buy because of the concerns with the property market, according to latest research by Scotland's leading online letting portal Citylets.

Significant surges in demand for rented accommodation, coupled with higher numbers of properties being let and for larger rents, all suggest that house hunters are reacting to the credit crunch by delaying property purchase.

The figures are revealed in the latest Citylets quarterly report, Trends in Scottish Residential Lettings, a respected tool among investors, landlords and letting agencies. It is based on 30,000 annual lettings through 200 agents.

Its latest report for Q1 (Jan-Mar) 2008 showed a substantial increase in people visiting the website to look for property to rent – up 47% on the same period of 2007. It also shows properties, particularly one bedroom flats to rent in Edinburgh and Glasgow, are continuing to being let more quickly and rents are rising.

The Citylets base index of Scottish rents rose by 3.6% on the same period in 2007 – the highest recorded.

Thomas Ashdown, Managing Director, of Citylets said: 'With demand remaining extremely strong throughout the last quarter and with more properties being let than we would normally expect at this time of year, we believe that for now more people are choosing to rent rather than buy.

'The well-documented problems in securing mortgages and lower confidence in the property market seem to be the key drivers. However whilst many landlords will take comfort in the latest figures, given the strong demand tenants may do likewise as in general rises over the last year are not significantly out of line with inflation.’

The average rent for Edinburgh rental properties continued its upward trend in Q1 2008 and now sits at £720. Year-on-year, rents for one bed flats grew 5.8% while two bed flats jumped by 6.3% – the largest rises for a number of years.

Glasgow, like Edinburgh, enjoyed high activity in its rental sector for one and two beds flats over the first quarter of 2008. Searches for one bed flats were also up 20% and flats were being let much quicker, This saw average rents for one bed flats rising by 4.6% year-on-year.

Two bed flats also recorded a sizeable increase in searches and a decrease in average time-to-let. However, while a high number of two bed flats were let, there was a slight decrease in average rent levels. This is best explained by the fact that there are still pockets of over-supply, particularly new build, two bed flats in Glasgow.