Scotland Rentals, BTL (Aberdeen, Edinburgh)

_Penny_Dreadful

Utterlyconfused81 said:

_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.

You're talking about offshore workers who get an uplift for having to go offshore. Also, offshore wind farms require fewer people offshore than an oil platform.  Oil platforms are essentially mini villages so that £50,000 figure includes the stewards and the cooks who work far harder than any of the technicians and engineers on board yet get paid less.  The majority of people who work in oil & gas don't go offshore so we're talking office jobs where a team lead, even of a very small team can easily be on £100,000+.  Renewable energy doesn't have the same margins as oil & gas where companies make huge profits in spite of themselves. The amount of waste on projects would bring a tear to a glass eye. Pre-2015 it was common to see contractors on a minium of £500/day who appeared to spend most of the day reading the Racing Post punctuated only be trips to the canteen and the toilet.  I certainly haven't seen behaviour quite like that in offshore wind yet.

I have a 2-bedroom rental property that was going for £900 pcm easy pre-2015 now I get £650 pcm.  Thankfully the mortgage on it is tiny so I'm not too impacted but I know lots of landlords in Aberdeen who are struggling to attract quality tenants.  One friend was so desperate she forgot the maxim, "no tenant is better than a bad tenant," and ended up letting her rental property to a walking red flag who cost her a lot of money.