drives up cost of renting – worse on way
teria remain tight. At the same time more would-be buyers are choosing to rent for the longer term until lenders reduce their deposit demands and economic uncertainty eases.
However the RICS report suggested that more rental properties are coming on to the market in Scotland, with 7 per cent more surveyors reporting a rise in landlord instructions than reporting a fall.
Sarah Speirs, deputy director at RICS Scotland, said the marginal growth in the supply of rental property in the three months to the end of June mirrored the increased demand for lettings. But while existing land- lords looking to expand their portfolios are still struggling to obtain finance, Speirs said there could be a fresh increase in the supply of rental properties over the coming months.
“Lack of supply means rents have started to increase”
Diarmid Mackenzie Smith
“The latest RICS Housing Market Survey shows a lack of demand from buyers, but increasing numbers of properties for sale. If this trend continues we may see the return of the accidental landlord, and some moderation to the recent rental recovery,” she said.
Diarmid Mackenzie Smith, of Rettie & Co in Edinburgh, said demand for rental accommodation remained strong in the capital. “Lack of supply, due to attempts to sell, means that rents have started to increase.
If sales do not complete the reverse will happen as properties come back to the letting market.”
Higher rental costs in Scotland were in tune with the picture across most of the UK. More than a quarter of UK surveyors said the cost of renting a home had increased during the second quarter, compared with those who reported a fall, while a third more expected rents to continue rising than expected them to drop.
However David Salusbury, chairman of the National Landlords Association, said that while increased demand was positive news for landlords, around one in five were experiencing problems with rent arrears.
“Added to the forthcoming cuts to Local Housing Allowance and the possibility of increased interest rates, it is clear any increase in rents will be quickly offset by these additional factors that have to be taken into account.”
the context of savings and investments, inflation is assessed in terms of the negative effect it has on returns. Essentially, inflation will erode the purchasing power of the funds invested, but the effect of inflation, unlike taxation and charges, is often not appreciated when choosing the most suitable investment or investment strategy.
Cash savings are impossible to protect against inflation because the interest rates available seldom match the rate of inflation. While the cash amount will appreciate in line with the interest rate, the underlying real value will be eroded.
Investment portfolios can incorporate vehicles that negate the effect of inflation. Traditionally, NS&I index-linked savings certificates offered investors an investment return that kept pace with inflation, but this option is no longer available after being withdrawn last month.
Another investment offering protection against inflation is index-linked gilts. Compared with conventional government gilts or corporate bonds, these tend to have a lower yield and their value moves in line with investors’ expectation of inflation rate changes.
Therefore, while they factor in inflation, they can be volatile and do not offer any
Christian Poziemski is a wealth manager within the private client and financial services division of HBJ Gateley Wareing
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