Are rents rising faster than tenants' incomes?

A report published today suggests that rents rose by over 3% over the last quarter whilst tenant incomes appear to have risen by less than 1% over the same period. The data was collected by HomeLet for the company's quarterly rental index, but let's have a look beyond the headline.

According to the story, the rental increase is less than it has been in previous years, which suggests a slow down in the development of rents for private rented property. However, the authors also hint at a decrease in the number of private rented properties available.

They may have a point here, especially when you add the news from the Land Registry which today announced a decrease in house sales between October and January. Not exactly the same period, but relatively similar nonetheless.

What's our take on it? It's quite simple, really. Prime residential property available for rent will always relatively high rents. However, tenants need to be able to afford the property they live in in the longer term - both when it comes to the rent as well as other monthly outgoings such as utilities. As a landlord with prime property, it is essential - and only fair to both parties - to check that you are renting the property to someone who can afford it.

Will rents continue to rise? This depends on supply and demand and will vary dramatically between different cities. In Edinburgh, demand for high quality lets for students and professionals continues to grow year on year which suggests that rents may continue to rise. However, more properties are becoming available, meaning supply is growing at the same time as demand.

The conclusion? At this point it looks like there's no need to panic just yet - at least not in Edinburgh.