Kerry Wells, Estate Agency Manager at Boyd Legal

For many years Edinburgh’s buy-to-let market has offered the opportunity to make a healthy return on investment with yields the envy of much of the UK.

Yet there is a whiff of change in the air – and a sense that the often-controversial buy-to-let boom could be losing its appeal.

According to the Residential Landlord Association, one in five buy-to-let investors across the UK are now planning to sell their properties.

In Scotland, around 50% of letting agencies have now started selling the homes of clients, in response to shifts in demand.

There have been both push and pull factors helping to fuel this trend, with a shortfall in the number of homes coming to market pushing more properties over and above valuations, with high demand pulling up selling prices.

The shortage of supply has seen house prices skyrocket, with homes in Edinburgh now more than 70% more expensive than the national average – making the prospect of a sale all the more enticing for any investor, especially those who locked in 10-15 years ago.  

It’s not just this high demand that is causing B2L landlords to sell up either. The government has played an important role in the slowdown of the sector through legislative changes. Recent amends to buy-to-let tax is seeing landlords cough up a heftier chunk to the Treasury than ever before.

Property Duty costs have also risen for investors too, with the introduction of a three percentage point surcharge for purchases and for second homes.

Furthermore, by 2020, landlords in a higher tax bracket will lose the ability to offset their mortgage interest against their profits. They will have to pay income tax on their turnover rather than their profit, which can trigger losses.

For any property investor who is unsure of the road ahead, or in fact has already decided they want to sell and need the best marketing advice, we’d always happy to help.

However, there is a light on the horizon for those who are not too quick to jump ship.

Investors with an entrepreneurial vision are still spotting opportunities in the buy-to-let sector by focusing on northern cities and Scotland, where yield is still often stronger than that of the south, meaning that there is a much higher chance of them succeeding and getting a decent return on their investment.

Landlords with relatively small mortgages are also more likely to stay in the market, thanks to affordable repayments.

Added to all this and as a final thought, while the role of B2L remains crucial in today’s property industry, few could argue that an increase in the supply of homes for sale is anything but a good thing for the market overall. More stock means there is more for people to choose; which helps to reduce surge of rising prices caused by the imbalance of supply v demand.

So – while the 2018 property market is already looking interesting – it is set to have an even greater appeal for those who like to predict trends and movements.

If you have a property to sell, whether a former B2L or your own home, make sure to get in touch with me, on 0131 202 5935 or kerry.wells@boyd-property.com