Scotland Rentals, BTL (Aberdeen, Edinburgh)

moneysaver2023

Hello 

I am thinking on investing in Scottish BTL market (e.g. 2 bedroom flat for a 'professionals' long term lease)

However, I have some reservations. 

Interested to hear forum's views on the following:

1. SNP's 3% cap on rent increases - less than a third of inflation rate just now. Not great for a landlord...

2. Edinburgh - after 30 years of capital growth (continually increasing values), is the bubble going to burst (similar trends to London)?

3. Aberdeen - after 7 years stagnation in house prices and rentals (since 2015 oil crash) - is this market going to rebound? I want capital growth as well as rental return...


Cheers

theartfullodger

There is no such thing as a long term lease for landlords since the PRT Tenancy came in (? 2017?).  Now a tenant may give notice to end a tenancy with 28 days notice.  They can do it on day 1 of tenancy.  

There is no longer any "no fault" , no reason at all eviction route either.

What training have done in being a landlord in Scotland?

_Penny_Dreadful

moneysaver2023 said:

Hello 

I am thinking on investing in Scottish BTL market (e.g. 2 bedroom flat for a 'professionals' long term lease)

However, I have some reservations. 

Interested to hear forum's views on the following:

1. SNP's 3% cap on rent increases - less than a third of inflation rate just now. Not great for a landlord...

2. Edinburgh - after 30 years of capital growth (continually increasing values), is the bubble going to burst (similar trends to London)?

3. Aberdeen - after 7 years stagnation in house prices and rentals (since 2015 oil crash) - is this market going to rebound? I want capital growth as well as rental return...


Cheers

What @theartfullodger said, there are no long term leases for tenancies starting after 1st December 2017. 

Why are you specifically looking at a 2-bedroom flat in Aberdeen or Edinburgh and not other areas? The 6% ADS is really going to sting if it’s a 2-bedroom flat in Edinburgh geared towards professionals that you’re after. 

The rent cap is only until 30th September 2023 but who knows what other japes and wheezes Patrick Harvey MSP has up his sleeves. Councils have the option of applying to the Scottish government to have an area to be designated a “rent pressure zone” if:

• rents in the area are rising too much
• the rent rises are causing problems for the tenants
• the local council is coming under pressure to provide housing or subsidise the cost of housing as a result

That would allow rent increase caps to be set for the area. As for the answers to questions 2 and 3, my magic 8 ball says, “better not tell you now.”

ProDave

If I were not a LL already I would not be starting now in Scotland.  Thankfully my 1 property is on an AST not a PRT and when the tenant leaves it will be sold.

_Penny_Dreadful

ProDave said:

If I were not a LL already I would not be starting now in Scotland.  Thankfully my 1 property is on an AST not a PRT and when the tenant leaves it will be sold.

SAT surely @ProDave

theartfullodger

ProDave said:

If I were not a LL already I would not be starting now in Scotland.  Thankfully my 1 property is on an AST not a PRT and when the tenant leaves it will be sold.

If it's an AST (in the paperwork so no AT5 served .) then it'll be an AT in Scotland...

SaT, I pray for LL sake 

ProDave

theartfullodger said:

ProDave said:

If I were not a LL already I would not be starting now in Scotland.  Thankfully my 1 property is on an AST not a PRT and when the tenant leaves it will be sold.

If it's an AST (in the paperwork so no AT5 served .) then it'll be an AT in Scotland...

SaT, I pray for LL sake 

Yes SAT. AT5 served at start in the correct order.  I am a little dyslexic so tend to get acronyms in the wrong order sometimes (I make sure it is right on anything official)  And it is a property that was previously our main residence so Ground 1, we want it back for our own use is a mandatory reason if that eventuality comes.

moneysaver2023

_Penny_Dreadful said:

moneysaver2023 said:

Hello 

I am thinking on investing in Scottish BTL market (e.g. 2 bedroom flat for a 'professionals' long term lease)

However, I have some reservations. 

Interested to hear forum's views on the following:

1. SNP's 3% cap on rent increases - less than a third of inflation rate just now. Not great for a landlord...

2. Edinburgh - after 30 years of capital growth (continually increasing values), is the bubble going to burst (similar trends to London)?

3. Aberdeen - after 7 years stagnation in house prices and rentals (since 2015 oil crash) - is this market going to rebound? I want capital growth as well as rental return...


Cheers

What @theartfullodger said, there are no long term leases for tenancies starting after 1st December 2017. 

Why are you specifically looking at a 2-bedroom flat in Aberdeen or Edinburgh and not other areas? The 6% ADS is really going to sting if it’s a 2-bedroom flat in Edinburgh geared towards professionals that you’re after. 

The rent cap is only until 30th September 2023 but who knows what other japes and wheezes Patrick Harvey MSP has up his sleeves. Councils have the option of applying to the Scottish government to have an area to be designated a “rent pressure zone” if:

• rents in the area are rising too much
• the rent rises are causing problems for the tenants
• the local council is coming under pressure to provide housing or subsidise the cost of housing as a result

That would allow rent increase caps to be set for the area. As for the answers to questions 2 and 3, my magic 8 ball says, “better not tell you now.”

To answer your Q Penny Dreadful:

Edinburgh is historically a good place for property capital growth and rental demand too.

Aberdeen has been good in the past and I see signs of an upturn in Oil and Renewable industries - hence was considering the city for BTL.

I'm open to other locations in Scotland / UK but these were my initial thoughts....... 


You mention 6% ADS being an issue - whats your advice here?

Thanks
MS

koalakoala

Deffo the best two cities to be looking at in Scotland, IMO.
It will be more expensive to buy in Edinburgh

_Penny_Dreadful

moneysaver2023 said:

_Penny_Dreadful said:

moneysaver2023 said:

Hello 

I am thinking on investing in Scottish BTL market (e.g. 2 bedroom flat for a 'professionals' long term lease)

However, I have some reservations. 

Interested to hear forum's views on the following:

1. SNP's 3% cap on rent increases - less than a third of inflation rate just now. Not great for a landlord...

2. Edinburgh - after 30 years of capital growth (continually increasing values), is the bubble going to burst (similar trends to London)?

3. Aberdeen - after 7 years stagnation in house prices and rentals (since 2015 oil crash) - is this market going to rebound? I want capital growth as well as rental return...


Cheers

What @theartfullodger said, there are no long term leases for tenancies starting after 1st December 2017. 

Why are you specifically looking at a 2-bedroom flat in Aberdeen or Edinburgh and not other areas? The 6% ADS is really going to sting if it’s a 2-bedroom flat in Edinburgh geared towards professionals that you’re after. 

The rent cap is only until 30th September 2023 but who knows what other japes and wheezes Patrick Harvey MSP has up his sleeves. Councils have the option of applying to the Scottish government to have an area to be designated a “rent pressure zone” if:

• rents in the area are rising too much
• the rent rises are causing problems for the tenants
• the local council is coming under pressure to provide housing or subsidise the cost of housing as a result

That would allow rent increase caps to be set for the area. As for the answers to questions 2 and 3, my magic 8 ball says, “better not tell you now.”

To answer your Q Penny Dreadful:

Edinburgh is historically a good place for property capital growth and rental demand too.

Aberdeen has been good in the past and I see signs of an upturn in Oil and Renewable industries - hence was considering the city for BTL.

I'm open to other locations in Scotland / UK but these were my initial thoughts....... 


You mention 6% ADS being an issue - whats your advice here?

Thanks
MS

Presumably you already own a property so you’re going to pay the 6% ADS, there isn’t any advice to get round that. How much LBTT will you have to pay to buy a 2-bedroom flat that a pair of professionals will want to rent in the capital?  How long will it take you to recoup that? 

As someone who is very familiar with both being a landlord in Aberdeen and the energy industry I’m not seeing signs of an upturn. Oil & gas companies are set for more rounds of redundancies with companies such as Harbour Energy blaming the Energy Profits Levy. Renewable energy doesn’t pay the same as oil & gas and whilst there’s life in the old dog yet I don’t think we’ll see a return to pre-2015 times any time soon. 

Utterlyconfused81

_Penny_Dreadful said:

moneysaver2023 said:

_Penny_Dreadful said:

moneysaver2023 said:

Hello 

I am thinking on investing in Scottish BTL market (e.g. 2 bedroom flat for a 'professionals' long term lease)

However, I have some reservations. 

Interested to hear forum's views on the following:

1. SNP's 3% cap on rent increases - less than a third of inflation rate just now. Not great for a landlord...

2. Edinburgh - after 30 years of capital growth (continually increasing values), is the bubble going to burst (similar trends to London)?

3. Aberdeen - after 7 years stagnation in house prices and rentals (since 2015 oil crash) - is this market going to rebound? I want capital growth as well as rental return...


Cheers

What @theartfullodger said, there are no long term leases for tenancies starting after 1st December 2017. 

Why are you specifically looking at a 2-bedroom flat in Aberdeen or Edinburgh and not other areas? The 6% ADS is really going to sting if it’s a 2-bedroom flat in Edinburgh geared towards professionals that you’re after. 

The rent cap is only until 30th September 2023 but who knows what other japes and wheezes Patrick Harvey MSP has up his sleeves. Councils have the option of applying to the Scottish government to have an area to be designated a “rent pressure zone” if:

• rents in the area are rising too much
• the rent rises are causing problems for the tenants
• the local council is coming under pressure to provide housing or subsidise the cost of housing as a result

That would allow rent increase caps to be set for the area. As for the answers to questions 2 and 3, my magic 8 ball says, “better not tell you now.”

To answer your Q Penny Dreadful:

Edinburgh is historically a good place for property capital growth and rental demand too.

Aberdeen has been good in the past and I see signs of an upturn in Oil and Renewable industries - hence was considering the city for BTL.

I'm open to other locations in Scotland / UK but these were my initial thoughts....... 


You mention 6% ADS being an issue - whats your advice here?

Thanks
MS

Renewable energy doesn’t pay the same as oil & gas and whilst there’s life in the old dog yet I don’t think we’ll see a return to pre-2015 times any time soon. 

As someone who worked in Offshore renewable energy for a number of years, if that is what you are referring to when you say renewable energy, I don't quite agree.

The average wage for offshore work on the rigs according to a google search shows as £50k a year.  It shows £57k for offshore wind farms but these can be taken lightly given it's an internet search.   

From my experience, the team I used to manage 5 years ago, so has likely increased, for our offshore maintenance contracts were paid base salary anywhere between £24k - £40k (with the exception of commission engineers which were considerably more expensive), but with their offshore uplift applied to their pay and hours worked due to long days being potentially stuck on a turbine or a substation waiting for a vessel to pick them up, at the worst, were paid annually £72k, with the higher end being paid £120k.