Here at Umega we spend time helping landlords (and wannabe landlords) buy their next buy to let investment, sourcing, inspecting and reporting on properties on their behalf. Therefore we thought it was about time we posted a blog to share some tips on where to look when buying your next buy to let investment in Edinburgh
What size of property to buy? – I really like the 1 bedroom market. 1 bedroom flats are affordable for a professional tenant/couple and there are some great areas within walking distance of the city centre. A 1 bedroom property can be picked up for between £100k and £150k so achievable for many budding investors. Student properties have also performed well over the past 5-10 years however there is a concern with the New Private Rented Tenancy (coming into force in late 2017) which will stop landlords being able to tie tenants into 12 months tenancies so I would stick to 1 bedroom professional lets for the moment.
What return should I be aiming for? – When it comes to returns it’s useful to convert each investment option to a yield to allow like-for-like comparison. This is easily done and shows how good a monthly return you can expect when you compare property investments (and compare these to money in the bank and the dreadfully low interest rates you can expect!). When looking for investment properties we tend to aim for 6%+ gross yield but anything from 5.5% upwards is good.
Why invest in Edinburgh? – As you’ll be aware, Edinburgh is an educated city with 4 Universities and a growing population (currently 500,000, expected to rise to 600,000 by 2035). The city offers an amazing quality of life and it’s a huge tourist destination. Edinburgh’s economy is driven by the strong financial services sector based here (RBS, Lloyds, Baillie Gifford, Standard Life, Scottish Widows, Aberdeen Asset Management) and there is an emerging technology sector (Skyscanner, FanDual, Cirrus Logic).
So, where are the next investment Hotspots? Well, in 2013 a review of strategic gap sites in the City was undertaken as it was apparent that they had the potential to create opportunities for investment, growth and jobs. These gap sites are referred to us ‘The Edinburgh 12’‘ with 12 specific areas earmarked for development/regeneration. This will undoubtedly have an impact on the wider areas surrounding these developments which presents opportunities for property investors, with good long-term capital growth prospects expected in these areas. Here are my tips for where to look for buy to let properties, based on 3 of the key areas earmarked for redevelopment-
Fountainbridge/Polwarth – There is huge regeneration in progress along the old Brewery sites adjacent to the Union Canal. The whole area has been, and will continue to be, lifted with residential development and a bustling office, restaurant and bar scene along canal. This is an extremely popular area for young professional tenants, in walking distance of the modern offices around Lothian Road/The Exchange District. 1 bedroom properties are renting for around £650 per month and it’s a great time to pick up 1 bedroom properties in this area before the full impact of the regeneration takes its effect on capital values.
Dalry – Another great option for property investment a stone’s throw from Fountainbridge is Dalry which stretches from Haymarket station to Gorgie to the West of the City Centre. Once again this area is within walking distance of the city centre and a massive gap site is finally undergoing development after years of structural and infrastructure work. The area has already been modernised by the transformation of Haymarket Station and a major development, ‘tHe Haymarket’ is starting to appear from the ground and will transform this part of town. Rents here are similar to that of Fountainbridge/Polwarth so once again a fantastic investment opportunity for buy to let landlords.
East City Centre – (including Top of Leith Walk/Hillside/top of Easter Road/Broughton Road) – as you’ll no doubt be aware by the frustrating traffic jams that fill the roads around John Lewis, The St James Centre is being completely redeveloped into a mixed use scheme including a shopping mall, cinema, residential blocks and a hotel. It’s going to be incredible! The Edinburgh St James development will be completed in 2020 and will overhaul this area at the top of Leith Walk and have a huge impact on property values in the surrounding areas. Rents for 1 bedroom properties will vary between property sizes from upwards of £600 per month.
So, as you can see there are some great options as to where to put your hard earned cash to offer you the best monthly return. A lot of great properties were bought up in March as investors looked to beat the LBTT 2nd home surcharge deadline but we’re starting to see the market fill up with properties for sale again after a couple of months of under-supply so its time to get out there and find an investment property.
At Umega Lettings we’re specialists in sourcing, letting and managing buy to let properties in Edinburgh. We currently manage around 600 properties all over the city and have a fantastic team of 18 ready to take on new, good-quality properties. We’re responsible, ARLA accredited agents and we get some really great feedback from our landlords and tenants; you can read some of these reviews here; www.allagents.co.uk/umega-lettings. I hope you find this article helpful as you look to build your property empire! If you would like any further information on our services please just contact me at; [email protected] or on 0131 221 0888 or pop into our office at 1 Marchmont Crescent and I would be delighted to answer any questions you have.