Buy-to-let can be an excellent way to put your money to work - Sean Nicol

Edinburgh’s private rental market has been under serious pressure in the last 12 months. Demand has rapidly outstripped the number of properties available with many landlords taking advantage of the booming property market by selling their rentals to realise the capital investment.

While we saw a dip in the buy-to-let market post-pandemic, it’s still an attractive proposition. Rents have gone up in the last two years, and although this mirrors the rising costs of living, increased tax liabilities and higher purchase prices currently in the market, it largely comes down to supply and demand.

Usually considered as a safer, longer-term investment, residential property provides a mix of revenue streams via rental income and investment growth through capital appreciation – this is especially relevant now with Edinburgh’s particularly buoyant property market.

There will always be a need for private rentals and buy-to-let can be a sound investment for your cash. You’ll find suitable properties at every level of the housing market; however, the low-mid value end tends to be more prevalent due to lower acquisition costs and what is usually a better rental yield.

Sean Nicol, Sales Director, Coulters Property

The best advice for anyone who is considering a buy-to-let is to be clear on your rationale and to research your options thoroughly. Make sure you have a properly costed and thought-out business plan – this isn’t an off-the-cuff decision when you have some spare cash. Have you considered the tax burden? What about LBTT and the Additional Dwelling Supplement? There is a lot to think about even before considering your responsibilities as a landlord.

Some key concerns right now are renovations, maintenance work and tradespeople. The current shortage of skilled labour and materials can have a knock-on effect - the longer it takes to get a property over the line and rent-able, the longer it takes to see that rental income.

Up-and-coming areas like Leith, where the tram system is nearing completion, could hold great opportunities for buy-to-let purchases – as well as the market value increase you should see long-term, there may be an amplified rise as the area becomes more popular. Look out for future infrastructure improvements, transport links, schools and amenities to get a good idea of an area’s potential.

It's also wise to think about who you want as tenants. Students, young professionals, families and retirees are all going to look for different types of properties in different areas – whether that’s a house with a garden or a city-centre flat.

If you’ve got everything in order, are sure of your strategy and are willing to take on the role of a landlord, then buy-to-let can be an excellent way to put your money to work. Look to experts for advice and if you’re not sure or don’t have the time to do the research yourself, a reputable property partner can help to find suitable properties for your consideration. The tenants’ rent should cover your mortgage and any running costs with a bit of profit left over, and ideally the value of your property will appreciate in line with house prices. So, while the market may ebb and flow, long-term landlords should see a profit when the time comes to sell.

Sean Nicol, Sales Director, Coulters Property