Page 9 - February 2024

EXPERT ADVICE EXPERT ADVICE

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

in Scotland the Edinburgh rental

market?
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 enq@hastingslegal.co.uk for further assistance and advice. Contact the team on 0131 253 2847 or landlord@espc.com.

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