Investing in Scotland 1st Aug 2017

Buy to Let in Scotland is becoming increasingly attractive as political uncertainty and high property prices impact the market in England.

Research (Hometrack) has found that the price gap between London and Edinburgh is at its biggest in 20 years. Edinburgh has an average house price of £206,000 and had 5.4% growth in the past 12 months – compared with London’s £492,000 average and 3.3% growth in the same period. As a result a lot of English investors are looking to Scotland, as we compare favourably to other parts of the UK in terms of yields, entry prices and potential for growth.

Further research (Your Move Scotland) observes that as far as yields are concerned, Scotland is outperforming England. Whilst there has been a dip in England and Wales, Scottish rental yields have remained solid with average rental property returns of 4.9% - exactly the same as a year ago.

Edinburgh presents a particularly attractive investment opportunity to many as properties offer high rental returns with strong capital growth, all at what is seen as being an (comparatively if you take London) affordable price. Edinburgh rents increased 5.2% year on year to an average of £1,037 per month, well above any other location in Scotland (see accompanying newsletter article on the PRS market).

The Edinburgh property market is notoriously stable, largely unaffected by economic forces which may impact elsewhere. It has a thriving student population, and these are students who often have financially secure parents willing to invest in a buy to let for their child, or to pay higher than average rents for good quality properties. According to the Royal Bank of Scotland’s Student Living Index, Edinburgh is the most expensive place for students to study in the UK – due to a combination of the high rent costs for student flats, and a lower than average term time income.

Whilst attracting an increasing number of investors from outwith Scotland, the majority of investors do still come from Scotland and reside within Scotland. Edinburgh is a relatively wealthy city and buy to let investors generally tend to invest in areas with which they are familiar / close to where they live. We therefore see a large number of Edinburgh investors expanding their portfolios within Edinburgh, and reaping the rewards. Indeed, a number of Edinburgh letting agents including The Key Place have reported continuing interest from landlords. This shows the confidence in the Edinburgh lettings market compared to the uncertainty down south.

It looks like the Edinburgh rental market is set to continue growing along with the rest of Scotland, as long as the finance is available. And for all of the reasons given above, it remains a safe place to invest. The Key Place can guide you to the right places to identify property values and yields in Edinburgh and can provide you with other useful property related information, so you can make sure you know all you need to know before making your future investment decisions. Get in touch with us now for further information.