The new landlords; People living abroad and renting out their homes

The recent steep rise in house prices is being partly put down to an increase in the numbers of individuals who are buying up property as letting investments.

To a certain extent this is true, but there is another, albeit lesser-known, connection with the rental market that is indirectly keeping the price of housing on the boil, particularly at the very top end of the spectrum.

Proprietors of traditional town houses in the centre of Edinburgh or the west end of Glasgow who voluntarily choose to work abroad or are posted there by employers, are becoming increasingly worried that, by selling their homes, they will be permanently priced out of the market.

Anyone selling a well-maintained house in either of these locations at the moment is likely to obtain a fantastic price, but if they do not actually need to buy another property - at least not at the moment - and do not require access to cash, what exactly would they do with the money?

Even if the proceeds from the sale are safely locked away in a relatively high-yielding deposit account, the return is likely to lag well behind the rise in property prices, at least in those locations. As for shares, even during the 10 years prior to the peak in 1999, the stock market would not have offered as good a return as the best properties in Edinburgh or Glasgow.

So people genuinely worry that, on their return to Scotland, they simply could not afford to buy back into the market - at least not at the level they were used to. Therefore, motivated by self-interest rather than greed, anyone moving to somewhere like the Far East on a contract now tends to rent out their home property rather than sell it, as would have been more common a decade ago.

This has brought to the rental market a type of property that was not commonly available before - the large, elegant town house, over three or four floors, with retained Georgian or Victorian interior features and classic furniture and furnishings to match.

Obviously this situation is great for residential letting agents like ourselves and for tenants, who usually get much more square footage for their money in a rented town house than they would with a conventional flat. But by reducing the amount of quality owner- occupied stock, it does nothing to help people wanting to buy property in the best areas.

David Alexander is proprietor of the residential letting agent DJ Alexander. E-mail [email protected] Demand is so great that this Edinburgh townhouse sold for more than (pounds) 1 million

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