If you make a property investment in Glasgow, here’s why you should remain largely unaffected by Scotland’s new LBTT regulations.
- The introduction of the new Land and Buildings Transaction Tax is having an effect on property prices in Scotland
- New research finds that properties in the most expensive cities in Scotland, including Edinburgh and Aberdeen, have started to gradually lose value
- But with a growing economy and rent demand, buy-to-let investors in Glasgow should remain largely unaffected
Is Glasgow’s buy-to-let market currently one of the strongest sectors in the Scottish property market?
The country’s new Land and Buildings Transaction Tax (LBTT) has now come into effect. The Edinburgh Solicitors’ Property Centre (ESPC) has revealed that average property prices in east central Scotland dropped by half a percent between April and June 2015 when compared to the same period last year. This followed an 18% year-on-year rise in the ESPC’s previous report published in April.
Generally speaking, the introduction of the LBTT has raised concern among some property buyers and sellers have for the Scottish property market. The LBTT replaced UK stamp duty under new devolved powers for the Scottish government, which sees graduated rates of tax applied to transactions for properties at varying value levels. However, transactions on properties valued below £145,000 are exempt from the new tax regulations.
Many experts predict places such as Edinburgh and Aberdeen will feel the effects of LBTT the most, with high average property prices. However, investors in Scotland’s largest city Glasgow should remain largely unaffected.
The average property price in Glasgow is just £145,543, meaning that much of the city’s housing stock falls under this LBTT threshold. Strong economic performance, which includes one of the fastest rates of job creation in the country, and rent growth of 11.1% between 2010 and 2014, should continue to appeal for UK property investors seeking high returns.
Furthermore, Glasgow is home to six universities and a 75% undersupply of dedicated student accommodation. Consequently, purpose-built student accommodation in the city carries with it a 30% rental premium.