Buying Into The Property Market In Scotland
The property market in Scotland is largely influenced by what is happening in the wider UK property market. However, there are some major differences between the two markets and these are mainly defined by the way that the home buying process is conducted and completed.
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There have been an unprecedented number of transactions in the property market in Scotland during the last few years and demand remains very high. Some estate agents are reporting business up to 30% higher than normal and property prices in Scotland appear to be unsustainable.
Financial experts have been comparing the high price bubble to the frenzy of buying that took place in 2006/7 and which ultimately ended in a crash. The Scottish property market is skewed to an advantage for sellers with buyers trying to outbid each other regardless of the real value of the property.
How Does The Property Market In Scotland Work?
Buying and selling property in Scotland has regulations that are designed to protect both buyer and seller. A property can be put up for sale at a fixed price but most sellers ask for offers over, which are either the minimum asking price or a bid over that amount.
Many properties are advertised as ‘offers over’ or ‘offers around’. Buyers do not need to put down a deposit unless they want to buy a new build house.
Although the price of a house in Scotland may say “Offers Over”, you are free to offer whatever you wish, although the seller may ignore offers below the set minimum.
A buyer must secure a mortgage or other means of payment before making an offer on a property. You will also need the services of a solicitor who will register a ‘note of interest’ with the seller or their agent.
After the usual searches, professional property surveys and receipt of a home report, your lender will have to agree that the property is worth the offer you are prepared to place.
If more than one buyer has put in an offer the solicitor acting for the seller will open them all at the same time. There is almost always a closing date for offers on property for sale in Scotland.
If an offer is accepted, a contract is set up and at this stage you may be asked for a deposit. A completion date is then agreed. A property sale in Scotland is usually quicker than in the rest of the UK.
Is Scotland A Good Place To Invest In Property?
Scotland has always been viewed as a good place to invest in property.
The city of Edinburgh is a favourite for both the UK and international property investors. The supply of properties in Edinburgh and good property bargains in Glasgow as well as the commuter belts surrounding the cities has been key to an increase in prices and transactions.
There has also been an upsurge of rural property for sale in Scotland. This is particularly true since the advent of the North Coast 500 route in Scotland, as more people now visit an area previously unknown to them and look for rural properties for sale in the highlands and islands.
The property market in Scotland has been and remains an excellent prospect for landlords showing the best rental returns in the UK.
Low interest rates mean that costs for landlords have fallen and the top fours areas of Scotland show rental returns of between 6.9% and 7.7% with the national average settling at 4.9%. Figures for rental returns have been a key driver for investors in Scottish property.
Another aspect worth investigating is the purchase of auction properties in Scotland. In many cases there are wonderful bargains to be had if you put in the groundwork and are patient.
From cottages in the highlands to flats sold at auction in Edinburgh, Aberdeen and Glasgow, there is a wide variety of properties sold at auction throughout Scotland.
How Does The Scottish Property Market Affect The Economy?
As in other countries, the property market in Scotland has a large impact on the economy.
In 2016, property transactions in Scotland were responsible for 10.6% gross value of the economy. As well as the revenue and tax created by property sales, the other services created by movement in the property market in the form of infrastructure and retail added greatly to the economic yield.
New builds in Scotland added directly to an increase in economic growth in Scotland and indirectly the extra affordable housing helped in the area of more labour and jobs.
Property Prices In The Scottish Property Market
Figures published for the year January 2021 show that the average price of a property in Scotland was £164,099, with the value of property sales adding up to £18.5 billion. This is an increase of 6.9% above the previous year.
The price of an average detached house is £271,119. A semi-detached house commands an average price of £165,107. A terraced house can be bought for around £131,000 and a flat will cost about £112,000.
The asking price for a property in Scotland will depend upon the area with some places showing much lower prices than the most popular locations.
What Are The Advantages Of Buying Into The Property Market In Scotland?
Unlike the rest of the UK, Scotland has a unique system of buying and selling property.
It is quite common for a solicitor to act as an agent. The seller must provide a home report unless the property is a new build. A home report includes an energy certificate and a questionnaire that must include details of any potential for flooding of the property, problems with dampness or wood rot and even arrangements for parking.
Buying a property in Scotland is usually faster and the sale is less likely to fall through. Sellers have to invest in a home report so are unlikely to spend this money and then pull the property off the market.
In 2018 the breakdown of sales amounted to 10.4% failed transactions compared to 21.8% in England. Gazumping is so rare as to be almost non-existent. The property market in Scotland is far more stable than the rest of the UK.
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