RECOVERING property prices and soaring demand are among the factors driving average rents past the £1000 mark for the first time, experts have claimed.
Rental costs of flats and houses have hit an all-time high this summer according to research by property firm DJ Alexander, with typical monthly payments soaring to £1011. The data is based on 500 new property leases agreed this quarter, which will deliver landlords just under £2 million per year in rent.
Analysts believe the rental hike is primarily being driven by demand for larger flats: the average for a three-bedroom flats now stands at £1264 per month – compared to £1042 at the end of last year – while a four-bedroom property equates to £1712 per month.
But average rental prices for smaller flats have also risen, with one-bedroom flats leaping by 13 per cent since the start of the year.
Rob Trotter, a senior property manager, said the trend was reflected across the Capital and was striking among three-bedroom houses – particularly in Edinburgh suburbs where supply is dwindling.
The latest monthly average rents for three-bedroom homes are now sitting at £1319, compared with £980 last winter.
“This is a city-wide figure, taking in properties from Gilmerton to the Grange,” he said.
“Any unfurnished house that is well-maintained and well-located flies off the market almost immediately, especially if it lies within the catchment area of a popular state school.”
Increasing property prices are said to be perpetuating rental demand.
In the last year, homebuyers saw the average property price risen by 6.7 per cent – to over £227,000.
First-time landlord Gillon Dobie, 26, purchased a two-bedroom flat on London Street in the New Town this year for “a bit over” £200,000.
Now, he lets out the property for £895 per month – slightly below the Edinburgh average.
“First and foremost I saw this flat as a safe haven for investment, as I take the view New Town property is as solid as the rock it is built upon,” he said.
“The fact it is likely to produce better capital growth than a savings account is something I will treat as a bonus.”
The booming rental market in Edinburgh is replicated across the country.
Last month, analysts at LSL Residential Services estimated the average monthly rent in Scotland had risen to £534 per month – the highest on record.
According to a Shelter Scotland report, more than one in four Scots admit to suffering “stress and depression” over housing and rent costs.
And Gordon Fowlis, the regional managing director of letting agents Your Move, said since the Scottish Government banned additional tenancy charges – such as reference checks, credit checks and inventory fees – two years ago, landlords have increased monthly rent demands.
“Tenancy fees were outlawed in Scotland with the well-meaning intention of protecting thousands of households reliant on rental accommodation,” he said. “But we can see that in reality tenants are starkly out of pocket.
“They are paying much more over a 12-month tenancy than they would have expected to pay for a single set-up fee, adding to the daily cost of living challenge.