Scottish Buy-To-Let Market Remains Resilient
The Scottish buy-to-let market has remained strong throughout 2016 and continues to offer competitive investment yields for landlords reports CKD Galbraith.
The firm has experienced sustained demand for good quality investment properties despite the raft of legislative changes within the lettings sector, with particular interest received from the 55 plus demographic with pension lump sums at their disposal.
In April this year the 3% levy on second homes came into force and next year will see the introduction of the Private Tenancies Act replacing the current letting system in Scotland. Many expected such changes and Brexit uncertainty would negatively impact the lettings market and deter those considering investing in buy-to-let properties. However, CKD Galbraith believes the lettings market remains resilient with both property supply and demand remaining steady.
The firm’s experience mirrors the findings of a recent report published by BM Solutions, the buy-to-let brand of Lloyds Banking Group which indicated rental yields have remained strong with Scotland showing an average of 6.3 per cent.
Bob Cherry, partner, commented:
The lettings market in Scotland still represents a sound investment opportunity for those looking to put their savings into bricks and mortar. As always, the vagaries of the buy-to-let market are subject to regional trends but overall demand remains especially strong from those who have reached or are approaching retirement age.
Recent changes to pension schemes has resulted in many people choosing to withdraw savings as a lump sum and invest the money into a market that offers attractive yields. With the Bank of England base rate having been cut to 0.25%, suitable buy-to-let properties offering an average yield of around five to seven per cent are often preferable to savings accounts and ISAs which might not offer such good interest rates.
Property is still viewed as one of the most popular and safest forms of investment for large sums of money, and with the right advice, can offer landlords a very appealing and long term investment option given the continued shortage of good quality housing supply.
CKD Galbraith is currently handling the sale of 18 Wood Court Troon, now under offer, a 2 bedroom apartment which will provide a buy-to-let landlord purchaser with a 5.3% gross yield per year.
Rural properties in particular remain in high demand from tenants, with two to four bedroom rural cottages averaging anywhere from £500 to £900 per month. With higher capital values for attractive cottages, the return on capital is often not as good as on apartments in town but still beats many alternative investments. For example, our Ayr office sold East Browncastle Bungalow for £181,000, having previously let it for £825 per month, a gross yield of 5.4%.