Investing in Scotland’s Buy-to-Let Market: Which Cities Offer the Best Opportunities?18-12-2023 | Scotland
Scotland is an enchanting place, to say the least. The amount of heritage and culture in this one country is enough to fill the gap for a few countries put together, and that is what makes Scotland so magical. From the exquisite Edinburgh Festival to the alluring myths and legends of the country, you will be sure to find a captivating spot to invest in Scotland’s buy-to-let market here.
This gem of a country offers many lucrative and fruitful areas to invest in for landlords and the property market is a thriving one. With its successful economy, growing population, and diverse range of cities, Scotland presents an attractive landscape for buy-to-let investors.
But which cities offer the best prospects for success?
Before we attempt to answer this question, you need to know what your goals are as a landlord wanting to invest in buy-to-let properties in Scotland. Once you know what your goals are, you can do in-depth research on the rental market and find the perfect corner for your buy-to-let property in Scotland.
Investing in Scotland’s Buy-to-Let Market
Investors are becoming increasingly interested in the property market in Scotland due to some of the best rental yields being gained whilst still investing in a reasonable amount of properties.
Although housing prices have been increasing globally, Scotland has managed to maintain a more steady market with no shortage of housing seeming to appear any time soon. Scotland also has a booming economy and extremely well-developed infrastructure which will give landlords peace of mind to know that you have invested in the right place.
Obtaining high rental yields around Scotland is possible with a high demand for property due to the country’s educational and job opportunities and great living conditions. There are many different property types on offer for landlords to invest in and at low values. At present, the average housing price in Scotland is £189K.
Scotland is known for having one of the best-performing economies in the UK, with the most developed and industrialised economies in Europe. With various job sectors on offer for residents, the key industries in which people work are tourism, oil and gas, finance, food industry and culture.
There are also, however, emerging sectors which also aid the Scottish economy in growing such as the renewable energy, technology, life sciences and research sectors.
Quality of life
With low crime rates and superb medical care, the quality of life in Scotland is definitely a perk. As well as great services, the educational opportunities are top notch with many prestigious universities and educational institutions located in the heart of Scotland’s cities.
The cost-of-living crisis is something that all landlords need to consider as it is a very real issue affecting every inch of the globe. The area in which you find yourself in Scotland would very much be a factor that influences the cost of living, however, one thing for certain is that it is not as high as in England.
We have already touched on this briefly, however, it is worth mentioning again that Scotland is home to an abundance of heritage and culture and whichever city you find yourself in will have beautiful locations to go and visit.
For example, if you find yourself leaning more towards Edinburgh, you have Edinburgh Castle or Loch Ness, the Glencoe Valley and the Isle of Skye all found in different areas around Scotland.
Which city offers the best opportunities for a buy-to-let property?
Generally speaking, we have discovered that Scotland is a beautiful country with picturesque landscapes and mountain ranges. But which cities offer the best opportunities for you as a landlord?
The most obvious place to start would be the country’s capital – Edinburgh. Location is probably the most important thing to consider when investing in a buy-to-let in Edinburgh.
Scotland’s captivating capital city stands as a beacon for buy-to-let investors such as yourself. Its vibrant cultural scene, renowned educational institutions, and strong employment base attract a diverse population, generating a steady demand for rental accommodation.
Princes Street and George Street are the two main places to be for a day of shopping and experiencing the ins and outs of Edinburgh. As well as the commercial advantage, there are many gorgeous outdoor, green spaces like The Royal Botanic Gardens, Inverleith Park and the Water of Leith Walkway.
Leisure activities are also on the cards for those tenants who need exploration and fun in their daily routines. The Omni Centre includes a multi-screen cinema, a Virgin Active health club and various restaurants too.
Properties in Edinburgh consistently command high rental yields, with average returns ranging between 4-6%.
The average amount of rent that you can expect to pay in Edinburgh is:
- 1-bedroom apartment in the city centre – £1,182.69
- 1-bedroom apartment outside of the city centre – £845.45
- 3-bedroom apartment in the city centre – £2,229.55
- 3-bedroom apartment outside of the city centre – £1,386.15
The next city worth looking into is Glasgow, Scotland’s largest city. Did you know, however, that Glasgow used to be known for being a small rural settlement? It’s pretty impressive to think that a small rural town has become Scotland’s largest city. As a landlord, you would be making a wise decision investing in a buy-to-let in Glasgow.
Glasgow is situated on the banks of the River Clyde in the west central lowlands. The city pulsates with energy and innovation with a thriving business sector and cultural attractions with the most cosmopolitan atmosphere. It is no wonder that Glasgow is a magnet for young professionals and families alike.
In 2020, Glasgow was named the 96th best place to live globally. This was mainly due to high-income equality versus low unemployment. As well this, The Times has also named Glasgow as one of the best places to live in 2023.
The buy-to-let market in Glasgow is equally dynamic, offering investors a combination of attractive rental yields and potential capital appreciation. Statistically speaking, rent in Glasgow is 19% less expensive than in London, with rents in the city being 62% cheaper than in the capital. The average rental yield for landlords in Glasgow is 6.73%.
On average, you could expect to pay the following in rent in Glasgow:
- 1-bedroom apartment in the city centre – £924.96
- 1-bedroom apartment outside of the city centre – £ 715.91
- 3-bedroom apartment in the city centre – £1,608.70
- 3-bedroom apartment outside of the city centre – £1,106.08
Known as the city of the sea, Aberdeen is quintessential in all that it is. The heritage and history of the city are fascinating and have made Aberdeen what it is today. I mean, if being home to 263 castles doesn’t make you a cultural hub, then I don’t know what does.
Aberdeen’s marine and maritime heritage plays an important role in its identity with ships docking against city-centre streets and seafood being sourced daily from two rivers and neighbouring fishing harbours.
If you want to invest in buy-to-lets in an area where tenants can spend their spare time cycling or travelling along coastal routes with inviting restaurants, then Aberdeen is the place to do so. With many different trails to choose from, your tenants will enjoy exploring and discovering the best of Aberdeen.
The real estate market has maintained its upward trajectory, driven by strong demand for centrally located one- and two-bedroom apartments. Renewed optimism in the oil and gas sector, fueled by new oil licenses and the carbon capture project, has sparked a surge in demand for spacious, high-quality family homes in attractive neighbourhoods.
While rent increase caps and eviction bans pose ongoing challenges for landlords, particularly in light of rising interest rates, the Aberdeen rental market remains buoyant, with rental prices and demand showing no signs of abating.
The average rental yield for landlords would be 5.5%, and the average amount of rent that you can expect to pay is as follows:
- 1-bedroom apartment in the city centre – £542.60
- 1-bedroom apartment outside of the city centre – £468.18
- 3-bedroom apartment in the city centre – £1,158.33
- 3-bedroom apartment outside of the city centre – £914.58
There are many treasures hidden in and amongst Inverness, including renewable energy, breathtaking tourism spots and up-and-coming technology. It’s these three ingredients that make up what we know Inverness to be; a magical city rich in Scottish folklore, mythical monsters and ancient lands.
It is safe to say that tourists will always feel a magnetic pull to Inverness so investing in a buy-to-let here would be a smart move for landlords, especially for short-term rental properties. So, if this is the type of buy-to-let you are looking for as a landlord, Inverness is the perfect place to invest.
Additionally, Inverness is home to the University of the Highlands and Islands, resulting in a great opportunity for student accommodation.
The average rental yield that landlords can expect to find in Inverness sits at 6.5%, and with property prices being lower than in other major cities in Scotland, that’s a worthwhile investment.
Inverness, the capital of the Highlands of Scotland, presents an attractive opportunity for property investors seeking a more affordable entry point into the Scottish market. With its potential for capital growth and enticing rental yields, Inverness emerges as a compelling investment destination for landlords.
The average rent that you can expect to pay in Inverness is as follows:
- 1-bedroom apartment in the city centre – £775.00
- 1-bedroom apartment outside of the city centre – £566.67
- 3-bedroom apartment in the city centre – £950.00
- 3-bedroom apartment outside of the city centre – £883.33
Factors to Consider when investing in Scotland’s buy-to-let market
Each investment will be unique to each landlord and their journey. The first thing that you need to consider as a landlord is what your main objectives are for investing in a buy-to-let in Scotland. The location that you find yourself in will determine the type of tenant you take on.
There are also a few other things to consider when deciding which city to invest in, such as the rental demand. Analysing the demand for rental properties in each city you’re considering buying in will help you determine the demographics, employment trends and student populations.
Understanding the type of rental yield that you will be receiving from each city is another important factor to take into consideration. You need to consider if the rental yield you will need to get is worth the amount of money you have put into your new buy-to-let. The way in which you work out the rental yield is by dividing your annual rental income by the property value and then multiplying it by 100 to get your percentage.
Equally, evaluating property price trends and future growth prospects will enable you to gauge potential capital appreciation. Furthermore, consider the affordability of properties in the city you want to invest in relative to your investment budget and potential rental income. This will help you make an informed decision about your next buy-to-let investment.
Venturing into the Scottish property market requires an understanding of its unique characteristics, distinct from those of England and Wales. The Money and Pensions Service (MaPS) provides a comprehensive guide to buying property in Scotland, outlining the process and associated legal requirements.
Unlike England and Wales, Scotland levies a distinct property tax known as the Land and Buildings Transaction Tax (LBTT). The Scottish Government website maintains up-to-date LBTT rates, ensuring informed decision-making for property investors.
Scotland also operates a landlord registration scheme, mandating registration for those renting out properties. The Scottish Landlord Register serves as a valuable resource, providing detailed information on tenancy laws and landlord responsibilities.
After considering all of the information in this guide, you will need to get buy-to-let landlord insurance. CIA Landlords has never been beaten on price so be sure to get into contact with us on 01788 818 670.
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