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How is the Scottish buy-to-let market performing? 


We caught up with our Regional Sales Manager for Scotland, Holly Morrison, to hear how the buy-to-let market has performed since reopening, the impact of new legislation on short-term lets and where landlords are buying.

How has the buy-to-let market in Scotland performed since the reopening of the housing market? 

Holly MorrisonDemand for property has never been so high since the market re-opened. With many people shut in for months, they’ve found the space they have isn’t providing everything they need - a study, garden and storage space for all the loo roll they’ve needed to hoard! 

With estate agents not able to immediately return everyone from furlough and surveyors’ diaries filling up fast, it took a while to get stock on the market and, combined with the pent-up level of demand, it sent Scotland into an ‘offers over market’. Edinburgh has experienced this market for a very long time but other areas, from Fife to the Highlands, that were not used to the bidding war style of offering quickly caught up. 

Many landlords quite understandably have decided to wait until the market calms (which there are now signs of) and have been looking to gear up on their existing portfolio to make their move when the time comes. Saying that, we’re seeing healthy levels of business, keeping our dedicated Scottish underwriting team busy. 

Some of my brokers have seen many of their clients keen to hang on to their existing property when moving, so Let to Buy is a popular area of the market at the moment. 

What sectors are performing more strongly and where are the areas of weaker demand? 

Residential is very strong at the moment but lenders’ criteria has changed frequently and mortgage prices have been fluctuating, making brokers’ jobs increasingly stressful, not to mention the pressures caused by turnaround times being pushed. 

In terms of weaker areas, the holiday lets market has been a little softer, but there are signs that it’s starting to pick up again with the popularity of staycations.   

Are you seeing any regional variance in demand in the Scottish market? 

The whole of Scotland has experienced the ‘Edinburgh offers over’ market. The only region that seems to have remained flat is Aberdeen. There are still some great deals to be had up there, especially at the lower end of the market. 

What impact has changes to Land and Buildings Transaction Tax had on the market? 

Within the residential market it has certainly helped first-time buyers and home movers save a little money, but the most you can save in Scotland through this incentive is £2,100, compared with £15,000 south of the border. 

The additional dwelling supplement in Scotland is 4% compared with 3% in England & Wales, therefore Scottish landlords need to have those extra funds to do the deal anyway. I think this incentive has appealed to more residential clients than it has landlords. 

Have landlords been targeting properties in England to take advantage of the Stamp Duty holiday in that market? 

Not that I’ve seen. There will always be some landlords that like to try different areas but the vast majority that I’ve seen prefer to buy property close to home. It’s even unusual to find landlords that have properties over the west of Scotland when they are from the east and vice versa. Landlords in Scotland like to buy local as they can manage their properties more easily. 

Edinburgh has a high proportion of Airbnb properties. As the tourism sector has been hit, have these properties been coming onto the long-term lettings market? 

Due to the Edinburgh Fringe Festival being cancelled and the lack of tourists, the holiday let market has been impacted. 

I have heard reports that many existing short-term tenancies have been flipped on to a longer-term option. This initially flooded the market with lots of available rental properties which did supress the monthly rental figure initially, but this seems to have bounced back. However, the level of enquiries for holiday let mortgages is starting to pick up. 

What has probably impacted the Edinburgh holiday let market more is the measures the city implemented to regulate short-term letting. Edinburgh has always had issues with housing supply and with many people retaining properties to put them on Airbnb it’s creating a bigger issue. 

Many Airbnbs are within residential tenements and with regular hen and stag weekends booked into the flat over or under you it has caused major complaints that the local authority is trying now to sort. 

From spring 2021, all landlords operating short-term lets in the city centre will have to have their property reviewed by the local authority’s planning department and given licence to operate. This will give the council the power to control the property’s safety, tax as a commercial business and ensure there are no ‘hotspots’ in the city to reduce complaints. 

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