Table of Contents
- Buying Into The Property Market In Scotland
- How Does The Property Market In Scotland Work?
- Forecast For the Property Market In Scotland
- Is Scotland A Good Place To Invest In Property?
- Property In Scotland FAQ
- How Does The Scottish Property Market Affect The Economy?
- House Prices In The Scottish Property Market
- What Are The Advantages Of Buying Into The Property Market In Scotland?
Buying Into The Property Market In Scotland
The property market in Scotland is influenced by what is happening in the rest of the UK especially in view of the difficulties that have encompassed the housing market in 2020. 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.
There have been an unprecedented number of property transactions in Scotland during 2020 and demand remains very high. Some estate agents are reporting business up to 30% higher than normal and prices 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 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 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.
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/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 a closing date for offers. 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.
Forecast For the Property Market In Scotland
When the UK property market ground to a halt in early 2020, it happened at the period when it would typically be busy. In June the market opened up and Scotland experienced a demand in transactions especially when the Land and Buildings Transaction Tax holiday was announced. It is understandable that buyers are uncertain about whether to consider buying a first property or moving, so what can be expected in the months ahead?
Reports published show a forecast for a steady increase of growth in the property market in Scotland. Overall house prices in the UK are forecast to grow by 2% in 2020 and by 8% in the next four years. The housing market has been extremely resilient and this has fuelled confidence for property sellers and buyers.
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 Glasgow as well as the commuter belts surrounding the cities has been key to an increase in prices and transactions. Both cities have been named as the top places to invest in property in 2020.
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.
Property In Scotland FAQ
Is The Property Market In Scotland Booming?
When the property market in Scotland reopened in June 2020 there was an upsurge in sales. Both buyers and sellers are showing more urgency and this has taken the market by surprise. Estate agents are reporting figures of two and half times the amount that would be normal and properties are attracting up to twenty bidders by the closing date. This surge in demand has encouraged a rise in prices.
How Much Deposit Is Needed To Buy A Property In Scotland?
A deposit is not always needed to make an offer on a property in Scotland but you will need to have finance in place to cover the value of the property. Your solicitor will register a note of interest in the property you want to buy. When you have made an offer and this is accepted a formal contract is drawn up. At this stage you may be asked for a small deposit of between £500 to £1,000.
Is An Offer Legally Binding When Buying A Property In Scotland?
Neither a verbal offer or a written offer means that you must go ahead with a property purchase in Scotland. You must use a solicitor to make an offer. If this is accepted and both solicitors have exchanged letters known as 'conclusion of missives' you will be committed to the property purchase. Backing out of the deal will incur a penalty which will have been outlined in the contract.
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. If the housing market in Scotland continues on an upward trajectory it will go someway to offsetting the effects of the Coronavirus and lockdowns.
House Prices In The Scottish Property Market
Figures published for the year January 2019-2020 show that the average price of a house in Scotland was £182,357 with the value of property sales adding up to £18.5 billion. This is an increase of 2% above the year 2018-2019.
In June 2020 the average property price had dropped to £157,056 but this was still an increase of 2.9% during the year to date. 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, 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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