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Buyers put squeeze on rentals
© Evening TimesOriginally published: 01.06.2007
After almost a decade of growth the demand for rental property looks to be finally dropping.
The Royal Institute of Chartered Surveyors has reported tenant demand has cooled in the face of rising rents, slower employment growth and a bounce in home sales.
According to some experts, the glut of new builds appearing across Glasgow is taking its toll on the local market, with high-end luxury property affected the most.
The RICS said, while 6% of its members reported a rise in tenant lettings in the three months to April, this was a fall from the 28% who reported rises in 2006.
It represented the biggest drop in rental demand for almost two years and is below the long-term average of 18%.
Demand fell for both flats and houses, although the slowdown was greater in the housing sector.
New landlord instructions – an indicator of buy-to-let activity –has fallen slightly.
In the quarter to April, 7% more chartered surveyors reported a rise in landlord instructions compared with 10% in the previous quarter.
The fall in activity has been driven by a continued reduction in returns and signs underlying house price growth is beginning to slow.
Gross returns fell for the third consecutive quarter, with the pace of decline accelerating to its fastest rate since July 2006.
Carolyn Donaldson of city letting agents Dwell Lettings believes the issue is less of a problem in Scotland, with the market in some areas, such as the north east, showing signs of improvement.
But she has witnessed a change in Glasgow.
She said: “I would say the biggest challenge is the number of new developments being built.”
“The Glasgow Harbour and Lancefield Quay areas are taking longer to let than the East End and Dennistoun – that is doing well because the properties are affordable.”
“People who are renting large luxury properties in the city are struggling. But that is the danger – if potential tenants can afford a high rent they are more likely to buy.”
