Page 8 - February 2024
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EXPERT ADVICE                                                                                                                                       EXPERT ADVICE

            The legalities of owning a second home                                          What’s happening in

                                  in Scotland                                               the Edinburgh rental

            Tim Taylor, Legal Director at Hastings Legal, shares the need-to-know
                             of owning a second property.
                                                                                            We look at the data from the latest
                                                                                            Citylets report, to see what’s been
           here  are  many  reasons  why  people   Property tax                             happening in the rental sector.
           consider owning second homes. Some   When buying any property in Scotland you may
       Tare  looking  to  make  an  investment,   need  to  pay  Land  and  Buildings  Transaction
       whilst  increasingly  the  bank  of  mum  and   Tax  (LBTT),  depending  on  the  price  of  the
       dad is stepping in to help children onto the   property.  However,  when  you  are  buying  a
       property ladder.                     second  property,  you’ll  also  need  to  pay  an   he  latest  Citylets  report  examines  the   on-year to £1,052. This means that the average
                                            Additional  Dwelling  Supplement  (ADS).  LBTT       Scottish  private  rental  market  during   cost to rent a one-bed property in Edinburgh
       Occasionally there might be a short crossover   runs on a banding system, while ADS is charged   Tthe  final  quarter  of  2023  (October  to   is very close to the Scottish national average
       with  a  sale  and  purchase,  meaning  you’ll   at 6% of the purchase price on top of LBTT.    December).  After  many  months  of  rising   rent  for  a  two-bed  property,  highlighting
       technically own two properties.                                                      demands and rates to match, the market finally   the  level  of  additional  financial  pressure  for
                                            It’s  important  to  highlight  that  you  may   saw a return to some recognisable seasonality   tenants living in the Capital versus other areas
       It’s important to fully understand the legalities   also  have  to  pay  Capital  Gains  Tax  (CGT)  if     during these traditionally quieter months.  in Scotland.
       related to this before considering any second   you go on to sell your property for a higher
       home purchase.                       value later.                                    Scotland-wide, rental rates rose by 12.9%, but   This  was  closely  followed  by  two-bedroom
                                                                                            in  Edinburgh  and  Glasgow,  increases  were   properties, which saw a jump of 10.5% in rental
                                            Mortgage availability                           notably in the single digits.        rates meaning the new average was £1,413.
                                            If  you  are  purchasing  a  second  home  with  a
                                            mortgage,  the  criteria  you  will  need  to  meet   Scotland’s  average  was  £1,097,  with  two-  The  average  rental  rates  of  four-bedroom
                                            will likely be different to that of purchasing your   bedroom  properties  seeing  the  largest   properties decreased, declining 3.6% to £2,496.
                                            first home. For example, if you are buying an   increase in rates. A 14.1% annual rise meant the
                                            investment  property  for  rental  purposes  you   average cost for this property type was £1,054   Properties  in  Edinburgh  took  18  days  to  let,
                                            will likely require a specific buy-to-let mortgage,   per  calendar  month.  The  slowing  of  rental   four days longer than the previous year. One-
                                            or if helping finance a property for a relative,   rates  was  most  notable  in  larger  properties,   bedroom  properties  performed  best,  taking
                                            you may need a larger deposit. Your mortgage    with  four-bedroom  homes  seeing  the  most   just 13 days to let (although this is three days
                                            advisor will be able to assist further.         pronounced drop.                     slower year-on-year).

                                            Local council licencing                         Renting  in  Edinburgh  remained  competitive,   30%  of  properties  were  let  within  one  week,
                                            If you are purchasing a second home to rent     with  the  average  monthly  rental  rate  rising   and 81% were let within a month of appearing
                                            out, you’ll need to obtain specific licences from   9.7% to £1,503 – although overall, the increases   on  the  market,  which,  while  impressive,  is  a
                                            your local council. In the Scottish Borders, there   reported are smaller than in previous months.  contrast to the figures seen even in the report
                                            are  circumstances  where  you  are  required  to                                    for  the  third  quarter  of  2023,  showing  how
                                            have an HMO licence for a rental property, or     Edinburgh’s one-bedroom properties attained   much the market has slowed towards the very
                                            a different licence for a short-term let.       the largest increase in rents, rising 14% year-  end of 2023.

       If you are considering purchasing a second home in the Scottish Borders, or anywhere else in Scotland, please contact     ESPC Lettings is an Edinburgh letting agent. We can help with marketing your rental property and finding the right tenants.
              Hastings Legal on 01573 225999 or email for further assistance and advice.  Contact the team on 0131 253 2847 or

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