Scottish property market

One year after the Referendum: review of Scotland's property market

One year on from the Referendum, and despite political and fiscal changes, Scotland’s real estate market is attracting investment across the residential, rural and commercial sectors.

The introduction of LBTT (Land and Buildings Transaction Tax) in April 2015 has seen growth within Scotland’s mainstream residential market, though it has delayed the recovery of the prime sector in the medium term. Edinburgh is the exception to this, where the prime market is attracting the buyers from London and overseas who remain cautious about investing outside the capital.

By the end of 2015, Scotland is expected to outperform the UK residential market as a whole, with a 3.5 per cent growth in values compared with 2 per cent south of the border.

Scotland’s residential market has also seen a notable shift to bottom-up growth. UK and Scottish Governments have introduced initiatives in an attempt to revive both the house building industry and buyers on the early steps of the property ladder. Buyers of homes below £400,000 are now enjoying more favourable rates of LBTT, while those above £500,000 are taking on the burden of this new progressive Scottish taxation.

Moving out of the city and to Scotland’s rural market, the appetite for Scottish farms and estates remains unabated, particularly from abroad. A total pool of £300 million is currently chasing this market, with a better understanding of Land Reform helping to allay concerns from potential buyers. Record low supply of farmland (due to CAP uncertainty and this year's bad weather) is keeping values high, widening the gap not only between England and Scotland, but also between the most and least sought after land.

Investor activity has continued this year in the Scottish commercial market, largely due to Scotland’s more attractive income returns when compared with other parts of the UK. Scotland continues to offer a discount due to its strong occupational market and lower levels of stock than other regional cities.  While 10 years ago Irish investors dominated the market, private equity, much of which originates from the US, is now driving Scottish commercial property. 

Further information

View Savills research on Scotland's property market, one year after the Referendum.

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