Is Scotland becoming a Nation of Landlords?
Tuesday 13 September 2016
New figures suggest that more and more people in Scotland are quietly taking advantage of attractive BTL opportunities and becoming landlords.
As house prices continue to rise smoothly on the other side of Hadrian’s Wall, landlords might look further afield than properties in their immediate location.
In March this year Scottish house transactions spiked with an extra 7,700 sales over what is typically expected.
Analysts believe this increase was a bid to beat the introduction of the 3 per cent surcharge on Scotland’s version of Stamp Duty - the land and buildings transaction tax (LBTT) - on second homes and BTL properties.
House prices in Scotland have continued to increase – the Stamp Duty spike notwithstanding - since April 2015, and the average price of property in Scotland now stands at £170,404 – 0.97 per cent higher than the start of the year.
Over the last three months the annual rate of this rise has been between 3 and 4 per cent, comparing favourably with the North West of England, where prices have risen by an average 4 per cent and beating the North East where the average price increase has been 2 per cent.
While these remain well behind the 9 per cent house price inflation seen in the East of England, it appears more and more landlords are looking North for their next investment.
Although the full effects of Brexit vote on the Scottish housing market remain to be seen, it is clear its underlying fundamentals remain strong.
Low mortgage rates, high employment levels and a growing demand for rental property are all boosting the BTL industry.
Scottish university towns continue to offer lucrative yields: Edinburgh heads the list with an impressive average rental yield of 6.1 per cent, followed by Aberdeen (5.6 per cent), Dundee (5.1 per cent) and Glasgow (5 per cent).
While it is clear that profits are waiting to be made, prospective Scottish landlords should take note of the SNP’s commitment to rent controls at its Spring Conference.
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