Linking Nations: Should You Invest in the Scottish Borders?

Lying to the south of Edinburgh, the Scottish Borders (often just referred to as ‘the Borders’) is a place steeped in history, sometimes violent and regularly disputed.

These days it’s far more peaceful and working hard to re-establish itself following the decline of the traditional textile industries which once defined it. Only forty miles from Edinburgh, the restored railway makes commuting a real possibility.

Choosing to invest in the Scottish Borders presents varied opportunities for landlords and property investors, both for buy-to-let and short-term holiday lets.

With many years of experience in the buy-to-let and property portfolio market, we’re going to examine why this attractive, but sometimes overlooked, region of Scotland might be right for you.

The Borders

Bonny, but troublesome. Not how you might describe the border region to the south east of Scotland these days, but go back far enough and it was an unruly place, with its inhabitants much given to helping themselves to the belongings of others.

In truth it seems that they weren’t overly bothered about which side of the border between England and Scotland they managed to liberate goods and livestock from, so it wasn’t a purely nationalistic pastime!

Economically the Borders was, and is, heavily reliant on agriculture; livestock rather than arable farming, forestry and the textile industries which grew on the back of the wool produced there.

The textile industries have dwindled leaving just a few dedicated specialist manufacturers. Galashiels however is the home of Heriot-Watt’s School of textiles and design, keeping the flame alive.

One of the greatest draws of the region is the area itself. Green rolling hills rather than the dramatic, raw mountains of the Highlands, the Borders are enchanting, with scattered villages and traditional market towns like Kelso and Melrose.

Property investment in the Borders

The Borders is not an economic powerhouse, although it is fighting back from the damage done after the 2008 financial crisis. The population in 2021 was 116,020, up from 115,240 in 2020 and expected to continue rising, albeit slowly.

Additionally, in the aftermath of the COVID pandemic there was an undoubted move by some property buyers to seek out homes with larger gardens and access to green, open spaces.

The majority of properties are owner-occupied, with the private rented sector accounting for 14% across the region, according to the Borders Council, which is in keeping with national trends.

Rents on average are similar to those found outside the cities of Edinburgh and Glasgow with an average of £628 pcm. Property prices however are attractive to anyone looking to invest in the Scottish Borders.

According to ESPC, two-bedroom flats in Galashiels were selling for £82,194, with an average property price of £218,455. Rightmove suggests an average price of £160,522, their figures updated in mid-2023 and showing an 8% increase on 2019.

This suggests that in addition to rental income, there is an opportunity for capital growth over the mid-to-long term.

Commuting

As mentioned earlier, the Borders are an area of outstanding beauty, and being predominantly rural there is a wealth of excellent local produce and outdoors activities.

This makes the area attractive to anyone willing to commute to the capital who either wants a better rental deal, or prefers living outside a city.

Since 2015 the Borders Railway has run regular services from Edinburgh to Tweedale, and there are numerous bus services connecting the other towns in the borders with the capital.

Additionally there are several excellent A-roads which pass through the region for those preferring to take charge of their own transport.

We’ll also take the opportunity here to mention remote working (once called telecommuting) which since the COVID pandemic has changed the way many people have worked.

While much of the Borders is within commuting distance, it’s also a fact that for some employees, their physical location has no bearing upon their ability to do their job. For this group, the other benefits offered by the Borders may be decisive.

What they will need is accommodation, and whilst there is a high percentage of owner-occupiers, there is still a viable demand for good-quality rental properties.

Holiday lets

Since the pandemic, the Borders, in common with other areas in the UK, have seen a considerable increase in holiday rentals.

While void periods are anathema to landlords, the returns from shorter-term lets can be tempting, especially as better-appointed properties at the luxury end of the market are also enjoying a considerable uplift in rentals.

The combination of attractive property prices, in a beautiful region popular with tourists and holiday makers, full of history and close to Edinburgh, may just tip your decision to invest in the Scottish Borders.

Advice from the property pros

The Borders is not a dramatic property hotspot in the way that Scotland’s principal cities are, however property prices are reasonable at present meaning that a potential investor has a range of cost-effective options available to them.

Proximity to Edinburgh makes the area attractive to those who don’t seek the city life, or city rents, and who appreciate peace and quiet. It would also suit remote workers who appreciate having a city an hour away, but not on their doorstep.

Average rents are in keeping with other areas in Scotland outside the largest population centres, being similar to places like Falkirk, Dunfermline and Perth, although the location is arguably more appealing!

We regard the Borders as a safe, solid investment opportunity, likely to deliver viable yields and realise stable capital growth. Like all areas, it is in constant need of good rented accommodation.

Holiday lets are not our area of expertise, and we have mentioned them simply to illustrate the fact that in purely investment terms, they may be of interest, as the region does encourage visitors.

In summary…

Many will regard the Borders as either somewhere to visit or a region to pass through on their way north or south. However with constant pressure on the capital to deliver quality accommodation; being close is one of its strengths.

Reasonable property prices and the likelihood of increasing population make it an attractive proposition for investors looking for a solid, and, we’d suggest, less risky option to add to your portfolio.

As always, we’d welcome the opportunity to discuss your buy-to-let investment aspirations with you so that we can offer advice and suggestions based specifically on your needs. Drop us an email or pick up the phone and we’ll be happy to chat.

In fairness, one of the bigger risks with the Borders is the danger that if you go looking to invest in the Scottish Borders, you may find yourself wondering if it wouldn’t also be the ideal place to live yourself!

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]