Buy-to-let landlords in Scotland see UK’s quickest return on investment

03/07/2019 15:20:07

Rental properties in Glasgow and its surrounding areas pay for themselves faster than anywhere else in the UK, according to new research.

The study shows that property investors in the city can recoup their outlay in just 13.3 years, compared with 35 years in central London, which has the longest wait.

Buyers can expect to recover their investment after 15.8 years in Belfast, 18.5 years in Newcastle-Upon-Tyne, 26.4 years in Plymouth, 28.6 years in Newport and 31.4 years in Cambridge.

Researchers said Glasgow has the fastest rate of return by some distance due to the city’s combination of relatively low average property prices (£129,764) and high average annual rents (£10,140).

In fact, rental properties across Scotland tend to pay for themselves faster than anywhere else in the UK, with the average rent covering landlords’ initial outlay in an average of 17.7 years.

Archie Love, Director of Scottish property Centre Motherwell, said: “While property markets in the rest of the UK has seen a slowdown in the rate of growth and, in some cases even a reverse, markets in Scotland, particularly Greater Glasgow and Lanarkshire have remained comparatively buoyant.

“Several factors, including a shortage of available properties, means that rents have also help up and, in some areas, rates have increased.

“All of this is good news for buy-to-let landlords who, if they choose the right location, can see a return on their investment quicker than anywhere else in the country.”

The figures are based on average property prices, buy-to-let stamp duty costs (Land and Building Transaction Tax in Scotland) and rental data from the government.

Recent fluctuations in property values nationally and variations in rental yield mean the location of properties has never been more important for buy-to-let landlords.

While property investment has been a sure-fire way of making a return in the past, recent house price stagnation outside of Scotland means your capital investment could be less likely to grow over the long term – or at least not by as much, or as quickly.

Purchasing a buy-to-let property in England, Northern Ireland or Wales will incur 3% extra in stamp duty (unless you’ve never owned a property before, in which case you’ll have to pay normal home mover rates). In Scotland, there’s a 4% surcharge.

As stamp duty is tiered, you’ll still pay different rates on different portions of the property price – but it’s a significant expense to take into consideration and can mean it will take a very long time to recoup your initial outlay.

 

If you’re thinking of buying your first rental property of growing your buy-to-let portfolio, you can get expert advice by calling your local Scottish Property Centre branch or visiting www.scottishpropertycentre.net

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