Landlords across Scotland are seeing benefits from the credit crunch, with demand for rented property being fuelled by economic uncertainty according to Citylets’ latest quarterly report, Trends in Scottish Residential Lettings.

The report showed an increase in rents, homes being let more quickly and increased tenant demand across the board.

The oil boom in Aberdeen saw demand far outstrip supply so that the average rent shot up to £561 for one-bed flats, almost 19% up on the previous year. However, a sign of a possible slowdown in energy sector employment may have contributed to a slight drop in demand for two bedroom properties. The spikes of high demand seen in Q4 of 2005 and 2006 have not been repeated – indeed average two-bed rents dropped 7% from December 2006 to December 2007 to £819.

In Edinburgh, the average rent for a one-bed flat at the end of 2007 was £518, an increase of 4% on the previous year. Two-bed properties also recorded year-on-year growth of 3.7%, putting average rents at £669.

Average rents in Glasgow for one bedroom properties in the final quarter of the year were £439, up 3.5% on the 2006 figure. Modest growth was also recorded in Glasgow’s two bedroom sector, where average rents were £578, an increase of 1.6% on the previous year’s figures.

Thomas Ashdown, managing director of Citylets, said: “What seems in little doubt is that landlords and letting agents had a healthy finish to 2007 – and so far a phenomenally busy January. We see no reason why that should abate during the first quarter of 2008.

“Heightened tenant demand is likely to continue through the first quarter of this year, even if the Bank of England’s latest interest rate cut boosts confidence. In the meantime higher borrowing costs for landlords allied with that increased demand are likely to see rents rise again in the first quarter of 2008.”