the cost of renting in Edinburgh has soared to a new high – with an average two-bedroom home breaking the £1000 mark for the first time in parts of the city.
Figures have revealed the gulf between available properties and the number of would-be tenants is at its widest “since records began” – according to city property experts.
Huge deposits in the buying market – coupled with stringent mortgage checks – are fuelling the city’s dog-eat-dog rental market.
The increased demand has seen average rents rise by more than five per cent year-on-year for some properties – with people clamouring for flats in the most sought-after areas.
Many new flats are snapped up on their first viewing by buyers who come armed with references, four-figure deposits and sharp elbows.
Steve Tigar, managing director of online property rental website Lettingweb.com, said: “These are stark figures of the like we haven’t seen before.”
In the EH3 postcode – which includes part of the New Town, Tollcross and the West End – the cost of a two-bedroom flat is an average of £1025 pcm – an increase on last year of £908. We found one two-bedroom property in Dundas Street being offered for £2171 a month.
Lettingweb.com, which advertises about 13,000 homes every month on behalf of agents across Scotland, reported that in November alone, 500 fewer properties were advertised and the time taken to let a property is falling.
The figure has sparked fears of a long-term shortage in the availability of properties.
Mr Tigar said: “Renting privately is an increasingly popular choice for people in Edinburgh – sometimes out of necessity as a result of mortgage restrictions introduced after the banking crisis – but often as a lifestyle choice.
“This change cements our view that something very significant is happening. The flexibility of renting privately on relatively short-term leases which can be continued for many years, combined with the high quality of rental property available, makes renting an increasingly attractive option.
“This is true not just for the perceived core markets of students and young professionals, but also for families.”
Mr Tigar said the firm had seen increasing evidence that the supply of rented accommodation is not available to meet the rising demand.
He said: “This is a significant structural problem in the housing market and one that we would encourage all stakeholders, including politicians, town planners, mortgage providers and house-builders to consider.”
According to Lettingweb, between September and November, almost 30 per cent of all advertised properties were rented within a week of being advertised.
Almost 75 per cent were rented within one month – well above the national average of just over 60 per cent.
Experts believe a lack of properties coming on stream to cope with the huge growth of the private rented sector will push up the price.
Philip Hogg, chief executive of home building industry body Homes for Scotland, said: “With official figures estimating that Scotland requires 465,000 new homes by 2035 in order to meet housing need, but current build rates pointing to a shortfall of around 160,000, Scotland is a country with urgent yet diverse housing needs.
“The growing rented sector clearly has an important role to play in achieving a balanced tenure mix.”
A report by housing charity Shelter Scotland earlier this year said more than one in four Scots are suffering “stress and depression” over housing costs.
According to the survey, 28 per cent of people in Scotland – compared with 25 per cent in England and 26 in Wales – said they were losing sleep.
Jon Black, of Edinburgh Private Tenants Action Group, said the private rental sector had become “unaffordable” for many tenants.
He said: “We need more housing built, but the right kind of housing. Good quality, affordable housing, and more council housing. We also need some rent regulation to ensure the sector remains affordable.
“Scotland should follow the example of stable and thriving rental markets in countries like Germany, where they have rent regulations to curb excessive increases in rents.”
Grahame Barn, director of the Federation of Master Builders Scotland, described the news as evidence that Scotland has a housing crisis.
He said: “Annually we are building and restoring thousands fewer homes than we need.
“The status quo is unacceptable. Too many families are living in inadequate housing conditions or are struggling to find accommodation.”
Neil Harrison, marketing and performance manager of the ESPC, said a number of factors had contributed to the rise in the cost of renting a home.
He said: “In terms of average rents in Edinburgh, pretty much since the credit crunch, we’ve seen an upward trend because more people are putting off buying their homes because they are taking longer to save their deposits.
“According to our reports, the time taken to let out a property can be really short and there’s always a demand from tenants.
“The landlord is generally in a good position and that will push your average rent prices.
“In addition, the new-build industry is not building enough houses to keep up with the level of demand so we are going to see a shortage.”
Legislation introduced last July designed to reduce disputes between landlords and tenants meant that deposits are now handed over to a third party for safekeeping.
Housing experts had already raised fears that the tightening of legislation regarding fees charged by letting agents would lead to costs being passed on to residents through rent hikes.
Rob Trotter, senior property manager at DJ Alexander, said: “Perhaps the principle reason for average rents in EH3 breaking the £1000 a month barrier is the entry to the market of Grosvenor Properties’ Springside development at Fountainbridge, which comes within the boundary of this postal district.
“In the last three months we have let 40 one, two or three-bedroom properties at Springside and rental rates for most of the two-bedroom flats have been in the range of £1200 to £1300 a month.”
He added: “The average rent on a two-bedroom Tollcross tenement is probably in the region of £700 a month whereas a New Town/ West End flat with the same number of bedrooms might rent at between £1200 and £1600 a month.”