Market Analysis 1st Oct 2016
Figures reveal that more people in Scotland are making the most of the current attractive buy to let products and are becoming landlords. There are also an increasing number of investors out with Scotland looking to get in on the game and invest within Scottish towns and cities. March saw a spike in sales which was likely due to people buying before the introduction of the 3% Land & Buildings Transaction Tax (LBBT). However sales have continued since then, along with a rise in house prices (the average price of a property in Scotland is now 0.97% higher than at the start of the year).
A recent survey (HomeLet) has found that rents for new tenants have continued to rise across the UK over the month of August, and now stand at an average of £913 / month, which is a 3.1% increase on August 2015. Scotland has continued a slow but steady rise and is up 1.1% to £629.
A study by Axa Business Insurance found that compared to England, Scotland’s rental culture is happier, friendlier and more settled, with 45% of tenants renting as a matter of choice. 22% cited freedom that comes with being a tenant as their main reason for renting. Edinburgh is seen as a bit of a stepping stone, with tenants renting for shorter periods of time than elsewhere in order to boost their careers and their income, before settling in areas where it is cheaper to buy. For investors looking for high yield properties, student HMO’s are continuing to be lucrative with Edinburgh at the top of the list with an average yield of 6.1%.
Tenants in Scotland expect to rent for an average of 9.5 years. The Axa study found that half of those surveyed rent out of necessity rather than choice, with a third wanting to buy but having no prospect of doing so. 17% are saving for a deposit (up from 11% in 2013).
70% of those surveyed in Scotland said they knew their landlord well, with a large number saying their landlord would go out of their way to help. Only 17% were unhappy with being a tenant.
Post Brexit analysts remain positive about the PRS market, observing that letting agents have reported no change to supply of properties, tenant demand and rent prices. And so with the low mortgage rates, high employment levels, and soaring demand for rental property, the future of buy to let looks bright.