AS WE are all too aware, the dynamics of our economy have moved significantly over the last few years. There are big changes in the residential property market as a result.
It is harder to buy a property than ever before – you need a larger deposit; it is more difficult to secure bank funding; and first-time buyers have significant debt (eg university loans). This means the average age of the first-time buyer in Scotland has increased significantly to 36 or 37.
Ultimately, the economic circumstances encourage people to rent for longer. The flexibility of renting may well see, among the younger generation, a diminishing desire to become tied to a large mortgage.
Attitudes to renting may shift in line with some of our European neighbours. In the UK 10 per cent of the residential housing market is in the private rental sector, whereas in Germany that is over 40 per cent and in Holland it is over 20 per cent.
Property prices in Scotland are looking set to rise. While this is a positive sign for the economy it is another challenge for potential first-time buyers as their ability to afford that first step on the property market is reduced.
It is therefore, not surprising, that there is boom in the buy-to-let market as landlords see an opportunity to invest in the right property as demand continues to increase. We regularly receive over 200 calls and e-mails in our branches every day from tenants looking for rental properties.
The sector can certainly prove to be a strong investment to deliver monthly cash returns. However it is important that investors go into the market with their eyes wide open to identify the right property with the best potential returns, supported by the right professionals to ensure risk and uncertainty are minimised. There is a need to ensure the property is well maintained on an ongoing basis both for tenants and for the long-term investment benefit.
With increasing demand for rental properties, and increasing regulations, it is important that quality service and professional standards are strived for across the board – from part-time landlords with a single property flat to institutional investors with a portfolio of rental properties.
• Colette Murphy is business & portfolio development director at Lomond Lettings