The buy to let market in Scotland is seeing a surge in landlords from other parts of the UK, most notably England, investing in property, new research has found.
Since 2012 the number of English landlords registering tenancy deposits on properties in Scotland has risen by over 430%, according to the research by SafeDeposits Scotland, which is warning landlords to make sure they comply with different deposit rules in Scotland.
Six years ago there were 260 landlords living in England registered deposits with them on rental properties in Scotland. That number surged to 1,388 new registrations in 2017 and data for 2018 shows that the trend continues as the number is up 226% on the same period in 2017.
SafeDeposits Scotland now holds over 3,300 deposits from English landlords on Scottish properties. ‘Scotland has different deposit protection legislation in Scotland from England and landlords, wherever they are, must ensure that they are using the scheme where their rented property is located,’ said Victoria Smith, operations manager at SafeDeposits Scotland.
‘We saw a dramatic rise in registrations in 2017, with 1,388 new registrations, which could be down to a number of contributing factors. For example, variations in rates of stamp duty in England and Land and Buildings Transaction Tax in Scotland, may make investing more attractive in the north,’ she explained.
She pointed out that the most significant landlord prosecution for non-compliance was a landlord living in St Albans who failed to protect her Edinburgh tenants’ deposits. ‘Seeing that the legislation has teeth may have spurred other English landlords to make sure they weren’t breaking the law,’ said Smith.
The landlords’ legal representative at the time in 2016 explained she was ‘an amateur landlady’ but in court the Sheriff described her as failing to meet her obligations.
‘While the sector expands and interest from landlords from outside Scotland increases, it is important that they understand the legal framework in which they are operating. For example, navigating deposit protection regulation and private residential tenancy legislation is vital to managing tenancies successfully in Scotland,’ Smith added.
By law, landlords and letting agents who take deposits from tenants must protect them in a Government-backed deposit protection scheme and SafeDeposits Scotland was established in 2012 when Scottish Government legislation was introduced to protect tenancy deposits.
It is the largest of the three approved schemes covering Scotland, the only one based there and the only one operated on a not for profit basis. It accounts for almost 60% of the market holding more than 118,000 individual deposits worth more than £84 million.
It was set up with backing from industry specialists RICS, the Scottish Association of Landlords (SAL), the Association of Residential Letting Agents (ARLA) and the Dispute Service which runs the Tenancy Deposit Scheme in England and Wales.