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A property too far?

In the current market, is it a good time to be buying a second home?

Matthew Gray,

Property Director at Pagan Osborne, comments:

In comparison to the Halcyon days, house prices are now being viewed as more realistic and the prospect for a deal is tempting.

We have a number of properties on our books that might be deemed suitable second homes. Holiday homes in the East Neuk and ‘buy to let’ apartments in Edinburgh are attracting considerable interest from likely ‘second home’ investors.

Many are disappointed with interest rates on savings. Some are cash buyers, but there is also a range of buy-to-let mortgages available and with a healthy lettings market, the right homes can produce rental yields that are generally more attractive than the current bank rates.

In Edinburgh, demand for quality rental properties is high. New Town, Inverleith, Stockbridge and Broughton are all areas with a stream of professional tenants.

When mortgages were easier to come by, rental demand tended to be for flats, but now we are seeing demand for family properties in areas such as Colinton, Trinity and Morningside.

Bruntsfield, Marchmont and Merchiston are good buys for investors whose children are attending university, but for those considering renting to more than three unrelated people,  beware of HMO (Houses in Multiple Occupation) licence legislation and check out if the property has this already and if not what are the prospects in obtaining it.

Leith is also popular, as buyers looking to rent out a two or three bedroom property can attain greater yields vs the purchase price, with many young professionals looking for a home near to work.
But it’s not all about becoming a professional landlord.

‘Staycations’ are popular with more people looking to have holidays closer to home.  With property being more affordable, there is a growing number of families buying homes in Elie and St Andrews, using them for holidays and renting them out at other times to generate extra income.

The East Neuk and Edinburgh are lucky to be in stunning geographical locations and therefore will always generate a demand, but there are things to consider.

Firstly, think about what the property is for, ensure the reasons for buying the property will be the same reasons a new investor will buy it in the future. Are you looking for a positive yield or long term capital growth?

Regular decoration and maintenance is a must if the property is lying empty and bear in mind that the rental income from a second home will be subject to income tax. There are many expenses that can be offset and reliefs which lower the tax liability.  It is important to keep records -  some expenses can be offset against income and others when the property is sold, reducing capital gains tax.

There can be hidden costs too, like factoring or oil fired central heating. If planning to let the property, be prepared for wear and tear and always create a contingency fund.


Not sure where to start? Why not just give us a call today on
0131 624 6820 for Edinburgh or 01334 475001 for Fife to discuss your needs.

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Want to work with a local, friendly company? Then find your nearest Pagan Osborne office to you below. However, we also work with clients throughout the UK so you can call any of our numbers and our helpful reception staff will be happy to forward on your call to the most appropriate expert to suit your needs.

Clarendon House
116 George Street
EH2 4LH Call Us
Tel: 0131 624 6820
Fax: 0131 220 1612
2 Comiston Road
EH10 5QE Call Us
Tel: 0131 539 3333
Fax: 0131 538 7204
St Andrews
106 South Street
St Andrews
KY16 9QD Call Us
Tel: 01334 475001
Fax: 01334 476322
12 St Catherine Street
KY15 4HH Call Us
Tel: 01334 653777
Fax: 01334 655063
1 Crossgate
KY15 5HA Call Us
Tel: 01334 656525
Fax: 01334 654119
Pagan Osborne
5a Shore Street
KY10 3EA Call Us
Tel: 01333 310703
Fax: 01333 311918


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