A TAYSIDE property expert has predicted that rental prices will continue to soar to record levels.
Would-be buyers are finding themselves stuck in the rental market, where ever-increasing rents make it a real challenge to save up for a deposit.
There are now about five million households locked out of the property market as a result of housing shortages and high house prices.
Lindsay Darroch, partner and head of property services at Blackadder’s, which has offices in Arbroath, Dundee and Forfar, was speaking following a report published by lobby group the HomeOwners Alliance.
The HOA’s report which uses data from the Department for Communities and Local Government and its counterparts in Wales, Scotland and Northern Ireland shows that London is the most affected, with fewer than half of properties in the city now owner-occupied, the lowest level since figures for the capital began in 1991.
The latest LSL Property Services buy-to-let index, shows that the average monthly rent across England and Wales hit an all-time high of £744 in October 2012, the seventh month in a row of rent increases.
On an annual basis rents in London have risen by 7% to £1,102 easily more than double the rate of inflation.
Mr Darroch said: ”The charity Shelter commented on the report advising that this is yet more proof that life is becoming more difficult for renters and the increase in cost is piling on the pressure for hard-pressed families.
“My understanding is that the Scottish market will report similar trends mainly caused by first-time buyers being unable to get on the housing market.
“Whilst I am noticing an increase in activity from property investors I do feel that demand for rental properties is outstripping supply.
“This is further evidence that both UK and Scottish Governments need to come up with a coherent strategy to assist first time buyers’ step on the property ladder.
“This will take some of the heat out of the rental market, stabilise the housing market increasing confidence with both banks and large developers.
“A policy to help the first time buyer would also go a long way to stabilising the economic conditions.”
Mr Darroch has also been a vociferous opponent of the Home Report since the concept was first mooted many years ago.
He added: “I see it as an unnecessary cost and burden on the hard pressed seller and all the evidence that I have gathered shows that it is putting the brakes on the housing market.
“One of the reasons behind the introduction of the Home Report was supposedly to reduce the number of surveys that were carried out on a property this has proved to be nonsensical given the 12-week shelf-life of a Home Report and also the fact that many lenders are not accepting the Home Report or a refresh.
“It would appear that now some lenders are in fact instructing their own surveyors to carry out a scheme 1 survey to check the original surveyor’s valuation of the property.
“This means that there could be as many as three surveys being done at a considerable cost which will inevitably be passed on to the consumer.
“The other interesting thing happening is that when the lenders’ surveyors are carrying out their survey for mortgage purposes they are simply valuing the property at the price the purchaser is paying.
“Not only should the extra costs be considered, but the other consequence of the Home Report system is a constant downward spiral in house prices.”
Mr Darroch has urged the Scottish Government to scrap the Home Report system.
gstrachan@dcthomson.co.uk