Biggest Buy-To-Let Gains Seen in Scotland

Latest News/01.09.2021

According to recent research, the average buy-to-let property gained £15,000 in value during the pandemic with Scotland seeing some of the biggest price rises. The typical value of a rental property went up by 6% from March 2020 to March 2021, but in Scotland this figure was 11%. It’s believed that these increases are a result of people moving out of cities in search of more space.

Across the UK, the value of the private rented sector has grown 5.8% to £1.4trillion due to the housing market boom we have seen over the last 18 months. Although the value of the buy-to-let sector went up, the number of available properties for sale fell.

Mortgage lender Shawbrook Bank carried out research into the effect the pandemic on UK landlords. Scotland, along with the North West of England and Wales, saw the most dramatic increases. Scotland was highest at 11%, North West 10.7% and Wales 9.5%.

In addition, according to the latest Nationwide index, residential house prices jumped by 10.5% in the year to the end of July.

According to the survey, over 30% of landlords planned on a more rural location for their next investment property and were attracted by features that would attract tenants as a result of the pandemic such as a garden, space for home working and more internal space.

LBTT holiday

The LBTT (stamp duty) holiday resulted in a 25% increase in those who purchase a buy-to-let property, rising to 43% for landlords with a portfolio of four or more properties. In addition, 46% of landlords said that they would not have purchased a buy-to-let property had it not been for the LBTT holiday.

The tax break, along with rising house prices, attractive yields and high demand from tenants, has resulted in this spike.

Scotland best for rental yields

The survey also found that Scotland was the best for rental yields, with an average yield of 5.8% closely followed by the North West at 5.5%.

A fall in supply

While the value of the buy-to-let sector increase, there was a marked decrease in available rental properties as landlords exited the market. The number of private rented properties fell by 2.6% in the year from March 2020. Figures from the National Residential Landlords Association show that the number of landlords planning to purchase a property fell from 19% in this year’s Q1 to 14% in Q2. By contrast, the number of those selling up was 20% higher.

Two thirds of landlords surveyed were confident about the market in the coming year.