Lettings market buoyed by financial uncertainty

Posted on 18/11/2008

Following years of prosperous growth, the property market has finally hit a wall. But it’s not all bad news when it comes to investing in bricks and mortar.

In the current grim economic climate, house prices continue to fall and the number of fixed price adverts rise as desperate sellers vie for the few buyers out there who are willing and able to make a move. With many banks and building societies reining in mortgage approvals, even first-time buyers are stuck, unable to take advantage of the new opportunities presented by sinking prices. 

But the property market’s loss is the lettings market’s gain. In Scotland at least, the lettings market has taken off to new heights since the financial meltdown began. It seems that the global economic downturn brings with it some good news for those with money invested in buy-to-let properties.
 

Increasing demand

According to the latest report from Citylets, Trends in Scottish Residential Lettings, the third quarter (Q3) of 2008 saw the number of properties let up 38% on the same period last year. Supply has also risen across Scotland with anxious sellers putting slow-moving sales properties up for rent to make ends meet.

Average rents in the central belt cities are also up, according to the same report, with the average monthly cost of renting in Edinburgh for Q3 standing at £752 and Glasgow £586. The higher demand for lettings is likely to continue in the short term, until property sales demonstrate a solid recovery and there is renewed confidence in the market.
 

A profitable alternative

“The figures are encouraging for established landlords and also for those who are struggling to sell in the current climate,” says Tahar Ali, Managing Director, Clear Group Scotland Ltd. “The lettings market is the way forward right now, and we are strongly encouraging sellers to consider renting properties out until the sales market is in better shape.

“It’s infinitely preferable to be in the position where your property is at least bringing in something towards the mortgage as opposed to sitting empty and contributing nothing towards its upkeep.”