Buying a Second Home in Edinburgh
Many of our short-term landlords are renting out their second homes here in Edinburgh and we are regularly contacted by prospective purchasers asking for our advice. To make it easier for you, we have written the below article to provide answers to some of our most common FAQs.
Why own a second home in Edinburgh?
There are many reasons why people look to buy a second home in Edinburgh. Apart from it just being a fantastic place to be, many buyers have family in Edinburgh, work here part of the year, holiday in Edinburgh or want to have easy access to the Festival etc.
Where to buy in Edinburgh?
As the property is going to be your second home, your priorities should be to buy where you want to be and within the confines of your budget. However, the areas that appeal to you are probably going to appeal to any potential short term guest. Most visitors to Edinburgh want to be in easy walking distance of the centre and major public transport routes.
The locations with the greatest allure lie within the mapped area shown below. Look at residences based in Old Town in the centre, the New Town or Stockbridge to the north, Bruntsfield or Marchmont to the south and Newington to the east.
Deciding in advance the type of guest you wish to attract and keeping this in mind when looking to purchase will make it easier later to find guests that are a good match for your home. As an example, a property in Newington tends to attract many visiting professors who are looking to be close to the University of Edinburgh.
The locations we suggest above are also rich in terms of the variety of properties available – whether you are looking for a modern or traditional build, there should be something for everyone. At Home in Edinburgh are always happy to advise you prior to purchase on the potential rental income a specific property may achieve.
Buying a property in Scotland
Many non-natives to Scotland are not familiar with the bidding system used here. Listed below are explanations of common ways in which the seller invites offers:
“Offers Over (or Offers in Excess Of)” – The seller is inviting offers over the asking price. For properties with a high amount of interest the final price achieved may be more than the Home Report valuation. You should seek advice from an estate agent or solicitor on prices achieved for similar properties in the area.
“Offers Around (Offers in the Region Of)” – The seller is inviting offers in the region of the asking price. It is the buyer’s decision as to whether to offer above or below the asking price.
“Fixed Price” – Offers are invited for the same price as the asking price.
Tax on second homes
When purchasing a property in Scotland the buyer will have to pay a Land and Buildings Transaction Tax (LBTT), which replaced UK stamp duty in April 2015. LBTT uses a graduated tax rate, working in a similar way to income tax. Under LBTT, properties bought for up to £145,000 do not attract any tax.
From April 2016, the Scottish Government also introduced an additional 3% supplement for the purchase of second homes. The supplement is 3% of the total purchase price, payable in addition to the existing LBTT charge.
At Home In Edinburgh’s view is that buying second home is often more than a pure financial decision as other motivations, such as wishing to be close to family, tend to be at work. Our second home landlords are usually willing to absorb the higher LBTT as they expect long term price growth in the city.
Once a second home has been purchased the owner will be liable for council tax at the property but you are allowed a 10% discount if the following definition is met – “A second home is a furnished property that is nobody’s sole or main residence, but it is lived in for at least 25 days during any 12 month period”.
Why rent out your second home?
At Home In Edinburgh provides many second home owners with a way of making some extra income through short term lets when their properties would otherwise lie empty. For most second home owners, short term letting provides the best of both worlds:
- Freedom to use your property whenever you wish but to make some extra income when you are not there
- No lengthy contracts with guests, giving you greater flexibility
- Peace of mind knowing that your property is being regularly inspected and cleaned – any issues which develop in your absence will be swiftly taken care of
- Access to our team of reliable and competent tradesmen who will be able to offer you advice on any home alterations or redecoration you may be interested in
Please contact us for an informal chat to see what we can do for you – 0131 229 4001.