Scotland is maintaining its reputation as an attractive destination for property investment. The Scottish private rental sector has doubled in size in the last ten years and the number of households in Scotland is projected to increase by 61,000 by 2021.
Recent statistics have shown that buy-to-let landlords in Scotland enjoy solid returns on investment, on average 4.9%, and increasing rental rates.
If you’re considering Scotland as a destination for your investment, as with any major investment, it’s important to be aware of the trends underlying this landscape.
In last week’s Scotsman, Kirsty McLuckie wrote a thought-provoking article about the number of homes people can expect to own over the course of their lifetimes. Britons in their 20s and 30s (who can loosely be grouped as millennials) will own, on average, 1.7 homes throughout their lives – half the number their parents owned. With homeownership on such a decline, landlords can be confident that the private rental sector will continue to offer a lucrative investment option.
2017 marked the first time in Scotland that potential homeowners have needed to raise £21,000 for a deposit. This represents a barrier to entry for many people, forcing them to stay in the rental market for longer than their predecessors – a rental market with rising prices, further hindering the potential to save for deposits.
National average rents in Scotland show a steady 1.5% growth year-on-year and, in Edinburgh alone, property prices are projected to rise by 23.4% by 2021. Increasing house prices, stagnating wages and the much-maligned gig economy all contribute to fewer houses being bought and sold by people in their 20s and 30s, which in turn drives demand in the rental market.
This social and financial landscape represents an opportunity for buy-to-let landlords – it can be assumed they are more likely to have the necessary capital to place a deposit when an attractive property comes onto the market.
The trifecta of (relatively) affordable property, consistent returns on investment and solid rental incomes make Scotland the perfect place for landlords to build and expand their property portfolio.
By Miles Gilham, MD of Glenham Property