Renting can keep the Capital's property market thriving

There's investment potential in buying to let in city, says Colette Murphy

LOOKING at the number of newspaper articles about the ongoing credit crunch and uncertainty in the property market, you'd be forgiven for thinking Edinburgh is hurtling towards a housing meltdown.

Stories of nervous buyers either running scared from the commitment of a mortgage or being squeezed out of the chance of purchasing property because of punitive lending requirements are commonplace.

It's a scenario that paints a bleak picture – despite the fact house prices are relatively stable.

First-time buyers' uncertainty has sparked a noticeable surge in activity in the rental market with potential buyers waiting for the market to improve.

But rather than this being a negative, there is much to say in favour of a swing towards renting.

For many, the desire to get the most for their money is a big factor in renting – and certainly for some a more sensible option.

Many buyers are deciding that, rather than overstretching their budgets, they can simply put their plans on hold and rent a decent property, likely to be in a much more desirable area than they could afford if buying, for a fixed monthly price.

A survey by Braemore Property Management found that a large number of people currently renting believe it will take at least 18 months for the economic situation to improve enough to allow them to consider buying a property.

But, almost a tenth of those surveyed said they were choosing to rent in the short term after selling their home. These people are deciding that it is not worth the risk of making a snap decision.

There are others who are put off buying a property as they think they will be unable to afford their current cost of living.

However, as the popularity for rented accommodation increases, we will need more investors to offer properties up to meet the growing demand.

This has created a real dichotomy in the market – on one hand there are those struggling to buy, on the other those with money to invest in buy-to-let are finding they have a huge investment potential in buying property.

We now have fewer landlords in Edinburgh looking to just make a short-term profit and instead we have a growing core of cash-rich investors who are starting to take control of the rental market.

But again this shouldn't be seen as a negative. Although there have been claims that rents are rising dramatically because of the demand, I don't think this is the case across the board. Instead, this new group of investors have kept prices in check as they are not subject to the same yield demands as the so-called amateur investor.

So while renting may not be the first choice for many, it's still an option worth investing in.

• Colette Murphy, director of Edinburgh letting agent Braemore Property Management