Report reveals signs that landlords are exiting the buy to let market in Scotland
The extra 3% Land and Buildings Transaction Tax introduced in Scotland in 2016 is having an effect on the buy to let market with landlords exiting because of extra costs. Some two thirds have been put off investing in a second home due to the additional tax and the staged withdrawal of relief on mortgage payments is also have a detrimental effect, according to the latest quarterly property monitor report from Aberdein Considine. The result is new landlords are being discouraged and existing landlords are increasingly selling in a bid to reduce costs by reducing their portfolios of properties. The firm says that the changes have weakened demand for homes in some parts of Scotland by flooding the market with stock and sales fell in 17 of Scotland’s 32 local authority areas in the fourth quarter of 2017. ‘There has been a significant change in the Scottish property market in the last six months and it is gathering pace. By targeting landlords, politicians north and south of the border are squeezing one of the biggest and most powerful buying forces out of the Scottish property market, which is already affecting sales in certain areas,’ said Jacqueline Law, managing partner at Aberdein Considine. She pointed out that in the central belt there is enough pent up demand from owner occupiers to cope with any extra stock coming to the market, so prices are still rising strongly in places like Edinburgh and Glasgow. ‘However, there are other parts of the country where an overprovision of stock could weigh down property values, creating a great market for first time buyers but really tough conditions for home owners looking to sell,’ she added. With more landlords opting to reduce the size of their portfolios, Aberdein Considine predicts that there will be a sharp decline in rental stock coming on to the market, placing greater pressure on the private rented sector, which will push rents higher. The report also shows that East Renfrewshire, which includes affluent Glasgow suburbs such as Newton Mearns, was the most expensive place to buy property in eight of 12 months in 2017, with price staying just ahead of Edinburgh. Prices in East Renfrewshire increased by 4% while in Edinburgh they were up 6.2%. The highest growth was 13.4% un East Dunbartonshire, followed by 12.25% in West Dunbartonshire, 10.8% in East Lothian and 10.2% in South Lanarkshire.
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