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Scottish Tenants Happy with Buy-to-let Properties, but Supply Might Fail to Meet Demand

A recent survey by Scottish letting agents Lettingweb, has shown that the Scottish private rented sector is going from strength to strength, but warns that the growing tenant demand could lead to a shortage in home supply. The news comes after the latest house price index showed a 0.7% increase in house prices during October 2014, putting prices at just £717 below the pre-recession peak of £165,515.

Overall, the research proves that the Scottish property market has recovered since the independence referendum in September 2014, with house prices currently rising at a faster pace than they did most of 2014. The rise equates to 5.7% overall annual growth in Scottish house prices, meaning a capital return of £8,850 for the average property investment in Scotland in the past year.

UK estate and letting agents Your Move’s Regional Managing Director, Christine Campbell, said: “After a run of monthly house price stumbles on the way to the landmark referendum, the Scottish property market has recuperated. Growth regained ground during October, and property values bounced back”.

Lettingweb, however, explained that the downside of this means that in some areas the Scottish buy-to-let market is structurally undersupplied. As more people have opted for affordable but high-quality property to let, the rented sector has doubled in size over the past decade.

What’s more, although 95% of tenants in Scotland have never been asked to leave their rented home unreasonably, 42% of tenants are confident of finding another suitable home due to concerns that there will be a lack of properties in the future.

But as Dan Cookson, Head of Research at Lettingweb, said: “More needs to be done to bring greater investment into the sector to meet that demand, and widen confidence than alternatives are available”.

The area, which is in the most danger of being undersupplied, is student accommodation. Since Scottish Universities offer free tuition to Scottish and EU undergraduates, there is continuing high demand for rented property, especially in Glasgow and Edinburgh where there are many Universities spread throughout both cities.

The current trends are likely to mean that demand for purpose-built student accommodation blocks in these cities will rise year on year, despite the market already being a popular investment throughout the whole UK during the economic recession.

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