What to we need to think about to help us decide between buying property to let in England and buy to let real estate in Scotland.
Do we buy property to let in England or Scotland?
One of the biggest considerations for us is where we buy property to let. We’ve narrowed it down to England (where we currently live) and Scotland (where we used to live) because there are areas in both which we know reasonably well. Plus there are other areas in both which we have reason to travel to regularly. So researching that area on the ground will be easy. Here are the pros and cons of how to buy property to let that will help us decide.
Buying in England
Pros
As a second property, stamp duty is lower than the equivalent LBTT north of the border.
Agents in England and Wales will be banned from charging letting fees from 1 June 2019. This is in line with rules in Scotland and meets with our Ethical Landlord considerations.
In the north of England, it’s not unusual to find areas where yields of more than 8% are the norm.
Cons
Some local authorities are choosing to implement an additional repairing standard which is closer to the extended regulations in Scotland. These local authorities also require landlords to be registered. This means additional admin time and additional renovation costs.
Buying in Scotland
Pros
Every seller is legally required to pay for a home report which is done by a surveyor and provides both a market valuation and a guide to the condition of the property.
In Scotland, the Private Residential Tenancy (PRT) is the only tenancy permitted. It establishes a start date but there is no end date. This could mean that the tenant stays forever but the usual reasons for recovering possession (sell it, move in ourselves, breach of tenancy) still apply. This is in line with our Ethical Landlord considerations.
It is possible to find properties that have a better than 6.5% yield – but only in a few areas and less than this is the norm.
Cons
Most properties are offers over and the systems works like sealed bids in England. Cash offers can be prioritised over highest offers.
As a second property, Land and Building Transaction Tax (LBTT) is higher than the equivalent stamp duty on the same property south of the border.
Letting agents have to be registered in Scotland – it’s an extra admin task to check that they are before you appoint them.
You also have to register yourself as a landlord whether or not you use a letting agent.
The repairing standard has been extended to meet new safety standards which are much more detailed and therefore expensive than the equivalent rules in England.
So do we buy property to let in England or Scotland?
There is no difference to finding and reference checking tenants in either England or Scotland.
Some tenants in Scotland prefer to deal with a landlord directly rather than go through an agent but this is getting more common in England too.
Also the new EPC rules for existing tenancies from April 2020 (need to have a minimum EPC rating of E) is the same on both sides of the border.
Since this is a side hustle and the goal is to make money, we’ve gone with the most profitable option. The decision is that we buy property to let in England. Stamp duty is lower than LBTT and the yields are higher.