Buying for investment purposes in the Scottish Borders.
In this article Ron Hastings discusses the merits of investing in the rental market:
With a property investment you should be looking at both the income return on investment (rental income) and capital growth. The latter will take a few years to materialise but there is plenty of scope to achieve a decent rental return while the market recovers. With signs of increasing buyer confidence and mortgage lending getting back to previous levels prices will improve and you should see a reasonable gain. To achieve the best result you need to focus on buying at the best price available and buy a property that is likely to be be demand when you come to sell. Unless you plan to live there yourself don’t be restricted by your own property preferences.
What types of properties are likely to give the best return on investment?
This will vary and there is a market for most properties but 2 or 3 bedroom properties make good investments as these tend to be in demand both as rentals and for selling on and realising capital growth. Ex local authority flats and houses were badly affected by the downturn in first time buyers and larger deposits required by lenders but this presented an opportunity for the lucky few to pick up a bargain with plenty of choice. A low cost improvement property could easily achieve returns of over 5%. On the other hand for an easier life a fully refurbished 2-3 bed property might be a cleaner buy and can still be acquired below the stamp duty threshold at £145,000. However, be aware that if you are buying a second home the Additional Home Supplement will apply on all properties over £40,000 and this is charge at 3% of the whole price in addition to any other “Stamp Duty” payable.
2016 saw a definite uplift in demand with first time buyers returning to the market, continuing low interest levels and more accessible mortgages and higher percentage loans. This has combined to put upward pressure on prices and buy to let investors should take advantage of current prices and act now while this still plenty of choice. A property that has been sticking due to market conditions makes a particularly attractive prospect and don’t be put off simply by time on market. As the poet of our age Bob Dylan once wrote “The times they are a changing ” so smart investors should buy now before things take off.
Town or Country – Location Location Location
Properties that attract potential tenant’s attention are generally in the town or on the edge of town due to the access to amenities and limited transport.
Country locations tend to take longer due to lack of access to facilities and remoteness issues. However The Borders does attract interest from a wide variety of tenants and not all have kids to take to school and after school activities. Most will have their own transport and that ideal country cottage is what attracts them to the Borders.
In the past decade the profile of clients looking to rent has undergone a sea change. Appealing to a diverse group that includes families, young working couples and people moving to the area but needing to sell their own home is the key to attracting tenants. A two or three bed property close to town or facilities will tick most boxes. The cottage in the country isn’t as easy to let but if it has wow factor that could be a dream home location and as such would attract a premium.
Some key areas to consider in the Scottish Borders include hot spots such as Kelso and Melrose and villages nearby while Selkirk, Coldstream, Duns and Jedburgh all offer good buy to let locations.
Galashiels is another town to consider, it is popular for renting and like Melrose with the new Borders Rail station at nearby Tweedbank there is the advantage of the Transport Hub and link to Edinburgh. Other locations such as Lauder, St Boswells and Earlston are also good options and Edinburgh commutable.
Villages such as Denholm and Ancrum or Gavinton and Swinton are popular locations for families and visitors.
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Hastings offer both a Fully Managed Letting service where we take care of all the details as well as a Tenant Finding service for those who prefer to manage their property portfolio themselves – See this page for details
If you are interested in looking at investment properties in the Scottish Borders contact Ron Hastings at Hastings Legal on 01573-225999 or see our full range of properties for sale here