Scottish Property is in high demand right now.

If you’re an overseas investor with capital to invest, a buy-to-let in Scotland could be the perfect choice.

As an experienced property professional, and one half of Scotland’s only estate agency for landlords, I can see that the market remains more than buoyant despite the challenges of Brexit, the Pandemic and Indyref2.

Scotland is certainly providing more opportunities for good capital growth and this, coupled with a high rental demand (not to mention Scotland’s net zero initiative!) means good potential for some excellent returns.

Whilst interest rates (hopefully) remain low and rental demand for buy-to-let in Scotland is consistently high, I thought now would be a good time to shine a light on some things to watch out for when purchasing overseas. 

So, without further ado, here are five pitfalls for overseas property investors.

1. Not understanding the Scottish property market 

The Scottish property market is more complex than you might think, with marked differences from city to city and from region to region.

If you are an overseas investor and see excellent returns in one locality, it’s tempting to assume the same for another, however if you take the time to research and look up property price comparables, you’ll very quickly find that that’s not the case.

In Edinburgh, you’d typically get lower rental yields but greater capital appreciation, but in other areas such as Fife you may see stronger yields but lesser capital appreciation. Having this sort of information makes it easier to select which area suits you best. 

There is plenty of help and advice available for when the time comes. If you don’t yet have a sourcing agent on your team, speak to a letting agent, estate agent, mortgage broker or solicitor to get advice on your chosen area. 

2. Choosing the wrong property

What may appear to be a reasonable price may not be feasible in terms of yields, tenant demand or location. As a landlord, you’re looking for people who will be looking to rent rather than buy such as students, families or young couples. 

A rental property in an area without schools, colleges or large employers will struggle to produce the demand needed and you may be looking at unwanted void periods while you try to find tenants.

In this respect, you may want to consider the benefits of an estate agent specialising in  tenanted property. They will already have local knowledge of the best yields and areas of demand, so you won’t be second guessing about cost. 

3. Making emotional purchases 

This happens more than you might think. For example, you may view a property and find it so appealing that you imagine living there one day. Which is a nice idea but unfortunately not practical in the long run.

While it’s true that some landlords may go on to live in a property, it simply doesn’t make good business sense to buy a property which suits you better than a prospective tenant. It’s a case of needing to think with your head rather than your heart.

A property is a long-term investment – for most people it will either serve as their pension or be sold in the future, so you have to do all you can to maximise your return in the meantime. This means considering your tenant’s needs rather than your own. 

4. Not assembling a good team

For overseas investors we would always recommend getting a trustworthy team together for purchasing and managing a buy-to-let in Scotland. A good solicitor, mortgage broker, estate agent and letting agent. 

All four are key for overseas landlords, particularly the solicitor who will put the offer in and the letting agent who is an important part of your team on the ground. 

While it’s true that the quality of virtual views is very good now, they can’t provide the same information as a physical view, and sometimes you just want to make sure that the property is as good as it looks. 

Don’t forget, once you’ve established a solid and trustworthy team for your first Scottish property, it makes it much easier and faster  to explore the market, get feedback on properties of interest and make an informed choice for future purchases.

5. Not understanding the process of buying a property in Scotland 

If you’re an overseas investor you may not be familiar with the Scottish property selling process. Submitting a formal offer and reviewing a home report aren’t commonly part of the process outside of Scotland, so don’t be caught out.

Scottish procedure is different to England. It can really hold up the process if you’re not aware of all the steps that need to be taken, and how to take them.

Of course, if you’ve already bought property in Scotland and have assembled a great team, you can trust them to help guide you through all the stages, from having your letting agent view the property, right through to completion. 

TIP: Want to know more? Check out our 5 Top Tips for Overseas Scottish Property Investment.

Advice from the property pros

Buying overseas is so much easier when you have a team around you that you can trust, and who can guide you towards the investment that’s best for you.

We had some overseas investors who recently had their eye on a premium property development in Edinburgh and we weren’t sure if it was quite the right choice. 

This was because they seemed more enthusiastic about the style of the building rather it’s investment potential. 

Perhaps it had a sentimental association for them, but put it this way, for the price of one of these properties you could easily buy two others in the same area. 

It’s more difficult these days to make serious mistakes when investing in property overseas because of the timescale, but that doesn’t mean there isn’t room for regret. 

In summary 

I hope this blog has been helpful to you when considering buy-to-let in Scotland.

Navigating the world of overseas property investment can be tricky, and having a great team at your back can lead to a much smoother result. 

There are some great advantages to investing in tenanted property, as many of the set-up costs will already have been met and of course, there’s already a tenant in place, so you’ll start receiving income straight away.

We have quite a few overseas clients here at Portolio and would be more than happy to answer any questions or give advice.

So, if you’re interested in learning more about buy-to-let in Scotland, and where to start, why not give us a call and book a free, no-strings consultation? We’re always happy to hear from you. 

Written by Chris Wood, MD & Founder of Portolio

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