RENTS for residential property are falling across Scotland as the balance of power shifts from landlords to tenants due to an oversupply of flats, according to a survey.
Citylets, an online letting service, is warning investors that too much property on the market is forcing rents down.
It also expects a rise in empty properties when landlords will not be generating any income to cover their mortgage.
Its lates
t quarterly report reveals that average rents in Scotland decreased year on year by 1.1% to £638.
Edinburgh saw the biggest drop with one and two-bedroom flats recording their first annual declines since Citylets began recording data in 2003. They were down 1.1% and 1.9% respectively. The Scottish capital was 2.6% down on last quarter to average £732.
The average rent in Glasgow dropped 0.7% to £560. However, Aberdeen was virtually unchanged at £860 due to the buoyancy of the oil sector.
Across the country, Citylets found that the greater choice of rental property available to tenants had also dramatically increased the time it takes to find a tenant. It says one and two-bedroom properties in Edinburgh are taking about 50% longer to let and 33% longer in Glasgow than they were over the same period last year.
Thomas Ashdown, managing director of Citylets, said: "While down slightly pretty much across the board, rents have done well given the abundance of supply we have seen come on to the market from would-be sellers in some areas. However, I believe the real impact of that is yet to be felt in the months ahead."
He added that landlords must adjust their expectations to new market conditions. Void periods – empty property – are much more likely and patience in finding the next tenant may be required, according to Ashdown.
While the sales market remains depressed, supply in Edinburgh in particular seems set to continue to rise. It is expected to peak towards the end of the year.
Ashdown said: "As a result, I would expect greater choice for tenants to continue and hence downward pressure on rents."
In the current economic climate many buy-to-let investors are looking for alternatives to the mainstream UK residential market. Property firm CLC Estates says it has seen record sales of timeshare properties to investors through its scheme which guarantees a rental income for 10 years with a return of up to 6%. It has properties in Perthshire, Spain and Turkey.
CLC Estates spokesman Paul Smith said: "CLC has 55,000 families on their books which mean we are able to guarantee rentals."
