Rental shortfall hits housing market

A SHORTAGE of property to rent in Edinburgh and Glasgow city centres indicates that despite the current uncertainty of the UK's political landscape confidence is returning to the residential property market in Scotland, one leading estate agent said today.   

 Rettie & Co said in the face of recent on-going wintery conditions and the general election on May 6, signs are emerging that buoyancy has returned to the housing market, bench-marked by a severe shortage of supply in the letting market in rental hotspots such as Edinburgh's New Town and Glasgow's West End.  

Diarmid Mackenzie Smith, Rettie & Co.'s director of Letting and Management, said the pendulum is once again swinging to an increasing number of properties for sale to the detriment of the number of properties to let in Scotland. He said as the number of sales transactions increase in number and speed in Glasgow and Edinburgh, there is a marked correlation in the decrease in numbers of unsuccessful sellers placing properties on the rental market.  

  “Over the last two years the demand for rental premises has increased by approximately 29% as a result of the difficult economic conditions when the tendency has been to rent rather than buy. The supply of rental premises, as people who couldn't sell let their premises instead, has kept abreast with this demand,' said Mr Mackenzie Smith. 

"However despite letting more than 150 properties in Edinburgh during the first quarter of 2010, we now see rental supply starting to run short. This is a predictable pattern of supply and demand in sales versus letting which is bucking the trend of seasonal variation over recent years as confidence returns to the sales market. It remains to be seen if buyers' assurance continues throughout the weeks preceding the general election and the summer months beyond.' 

Mr Mackenzie Smith said the decrease in the number of properties to let, combined with the increased level of demand spells good news for landlords and those considering investing in buy to let. 

“Landlords are seeing good quality properties renting quickly and void periods at an absolute minimum as a result rental demand remains particularly strong in both Edinburgh and Glasgow for one and two bedroom flats which make up 70% of Rettie & Co.'s letting portfolio. 

'There is also sustained and strong demand for rental properties at the higher corporate end of the market from £1500 to £4000 per calendar month in both Glasgow and Edinburgh. This market increased by 300% in February and March compared with the past 12 months indicating a strong resurgence in the top end jobs market; of all the professional lets over £1500 a month in the past year, 50% have been in the last two months. 

"This also indicates to Rettie & Co. that companies are relocating higher end professionals on limited contracts and often without their families. Given these circumstances many professionals may be circumspect about buying a top end property at present and this trend is reflected in the top end of the sales market which still remains slow."

Last month Rettie & Co said the constricted supply of good quality housing stock across the country has resulted in an "optimum window of opportunity for sellers, especially those with properties in prime locations, with the majority of sales transactions by the company in 2010 taking place at or above Home Report valuation levels where sales are achieved within two months of a property’s launch”.