Cost of renting rising faster in Scotland than anywhere else in the UK

Cost of renting rising faster in Scotland than anywhere else in the UK
Renting is becoming more costly in Scotland. Pic/Daniel Leal-Olivas/PA Wire

THE cost of renting a property in Edinburgh has risen faster than anywhere else in the UK this year, according to a new report.

Tenants in the capital now pay more than 4 per cent more for their home than they did a year ago, despite the overall average cost of renting falling across the UK.

The rise in the cost of renting in Auld Reekie has been mirrored by other parts of Scotland, with half of the top ten steepest increases found north of the border.

However, one area bucked the trend with rents falling by almost four times the national average.

The Landbay National Rent Review (LNRR) found that the amount people had to pay to landlords fell by more than 6 per cent in Aberdeen and 4 per cent in Aberdeenshire, as demand for property slumped following the downturn in the oil industry.

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Overall, rents grew by 1.5 per cent in Scotland during 2017, the fourth highest increase in the UK after the East Midlands (2.13 per cent), South West (1.63 per cent) and East England (1.57 per cent) and the largest north of Birmingham.

Last month the average cost of renting dropped by a small amount, the first month on month decline in five years.

This was due to a fall in London, where the highest rents in the country can be found as well as the biggest number of properties owned by landlords.

The LNRR said that rent rises had been kept low due to a number of factors, but warned that the costs could rise next year as interest rates begin to creep up and borrowing becomes more expensive.

The report states: "Tighter government regulation and higher tax obligations have put extra pressure on landlords to increase rents in 2017, but two key factors have allowed them to shoulder these rapidly rising costs.

"The Bank of England’s enduring Term Funding Scheme (TFS), which has injected a significant sum of cheap capital into banks, together with record low interest rates, which have also kept borrowing costs low, have both helped landlords keep a lid on rent rises across their portfolios.

"But with interest rates rising, and the TFS nearing its end, upward rental pressure is likely to be just around the corner."

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Meanwhile, the report lifted the lid on the obstacles facing younger people looking to get out of rented property and into their first home. 

It found that 'Millennials' renting an average-size property outside of London who begin their tenancy at age 21 will spend an average of £110,830 to a landlord before buying their first property at the average first-time buyer age of 32.6.

For those living in the capital, where property prices and rents are significantly higher, the average household will have spent £273,210 on rent by the time they take their first step on the property ladder.

The LNRR warns of an "emerging generation" of lifetime renters, with almost half of young people not expecting to ever own a home of their own house.

For this emerging group of lifetime renters, the total amount they will spend on rent in their lifetime will was said to be an average of £1.1million, including savings for 15 years of rental payments after they retire.

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The report follows findings by the Scottish Household Survey, which showed that the proportion of young people aged between 16 and 34 who privately rent has increased from 25 per cent to 40 per cent over the past 10 years.

It has also been said that first-time buyers in Scotland will have to pay nearly £60,000 up front to secure a home within the next decade

A housing shortage has been blamed for rising rents, with £1.75 billion of Scottish Government funding recently allocated to councils to stimulate investment in affordable housing. The SNP aims to deliver 50,000 affordable homes by 2021.

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