Handelsbanken Wealth and Asset Management urges professional landlords to plan for the future
Most professional landlords with large portfolios (52%) have no succession plan in place, risking the future sustainability of their business for the next generation.
The findings, from local relationship bank Handelsbanken, also suggest a worrying lack of succession planning among older landlords, with half of those aged 45 or above lacking any long-term management plans.
According to Handelsbanken’s SME Landlord Survey Report 2022, which surveyed 120 professional landlords with at least four properties, more than a quarter (27%) of those with no succession plan said they had not had the chance to develop one yet, while 23% admitted it had simply not crossed their minds.
Around one in five (19%) said that they had no one to leave their portfolio to, while 15% stated it is simply not a priority for them – with the same proportion saying the process was just too complicated.
The study shows that landlords with smaller portfolios are far more likely to have taken steps to protect their portfolio from estate tax liabilities: an overwhelming majority (96%) of landlords across all age groups with a portfolio of four or five properties say they have long-term succession plans in place, compared to just 52% with more than 10 properties, suggesting that those with higher value estates are less concerned about the tax liability facing the next generation.
Among all those with a clear succession plan in place, more than half (54%) plan to convert their portfolio into a property development portfolio to attract business property relief, while 43% are considering a charitable trust, which would enable the handover of business to their heirs with minimal tax exposure.
Other popular options include family trusts (35%), family investment companies (28%) and acquiring agricultural properties to qualify for agricultural relief (26%).
Plans and solutions for succession planning
Percentage of respondents
Converting portfolio to a property development portfolio to attract BPR
54%
Charitable trusts
43%
Family trusts
35%
Family Investment Company
28%
Acquiring agricultural properties for Agricultural Relief
26%
Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth and Asset Management, a subsidiary of Handelsbanken, said: “The success of buy-to-let over the past decade has created huge numbers of wealthy landlords – with a real need for dedicated financial and tax planning.
“Property investors with substantial portfolios often defer creating a wealth succession plan, but are prompted into action when considering the alternative – the need for their heirs to sell assets to meet the tax liability on death.
“A plan that includes the use of a family investment company or a trust may carry some initial tax cost, but if put in place early enough, has the potential to create far greater savings over the longer term.”
To read the full Handelsbanken’s SME Landlord Survey Report 2022, please click here.
Community campaigners fighting to save the Silverlea woodland, wildlife and heritage site from a housing development have condemned as “Council lies” the claim that the site is a “barren” flytipping site of “low landscape value and low recreational value with few quality trees”.
A meeting of the City of Edinburgh Council development sub-committee on 10 August flouted the Council’s own policy by approving the building of 142 houses on the green belt in the Muirhouse and the Salvesens area in north-west Edinburgh.
The Save Our Silverlea Campaign describe a photo of the site produced by the Council to justify the development as “totally misleading”.
A SoS spokesperson said: “The photo showed a big pile of flytipped waste – but when a team from Save Our Silverlea visited the site days after the Council meeting, all we found was one white plastic bag and a dumped shopping trolley.The Council photo was either very old or taken elsewhere. Councillors visited the site shortly before the meeting so they should have known the photo was ‘fake news’.”
Save Our Silverlea have produced photos of the site showing massive trees and a verdant and vibrant woodland.
30-40 mature trees are to be felled to make way for the proposed scheme.
“We defy anyone – even a Councillor – to look at these magnificent trees and say this is a “barren” flytipping site. Clearly there has been some flytipping over the years – but if the site was sympathetically opened up to the community as a mini nature reserve with low impact paths and perhaps a children’s play area, then this increased footfall would act as a deterrent to flytipping.
“The Council is effectively “saving” the site by destroying it.”
Freedom of Information request
The camapigners say the city council tried to justify the destruction of dozens of mature trees by claiming they were planting 131 saplings on the narrow strip of grass known as Silverknows Park.
At the Council meeting Save Our Silverlea spokesperson Edward Murray described the real situation: “My flat overlooks Silverknowes Park and I watched them planting these saplings out in mid-February on a bitter cold day with the ground waterlogged,” he explained.
“The end result is the vast majority of these saplings never took root. They’re dead. Are we then to exchange 30-40 mature trees for row upon row of dead twigs in plastic tubes? That doesn’t strike us as a fair exchange.”
On 16 August Save Our Silverlea submitted a Freedom of Information request asking how much the Silverknowes Park Tree Plantation cost.
At the Council meeting Edward Murray described Muirhouse, where he has lived for over 30 years, as “just a dormitory for workers to sleep in before going back to work again”.
Mr Murray added: “Muirhouse is the size of a small town; it has no primary school, no park, not even a pub. It doesn’t even have a supermarket. In short, it is a deprived area. We have nothing down there. It’s one of the most deprived areas in Edinburgh.
“And now, having taken practically everything, you want to take our last green space, the Silverlea site, for development, destroying a wildlife habitat and creating congestion and pollution along the Silverknowes/Muirhouse Parkway, described by Police Scotland as ‘the second most dangerous road in Edinburgh’.”
Save our Silverlea are continuing their campaign: “As climate change threatens the future of humanity, we need to act to defend our green spaces. This land should be used for the local community – not to make £millions for greedy property developers.
“We need much more council/ social housing – build council houses on the brownfield sites where they are now building 1000s of private houses. The struggle to save our Silverlea continues.”
✓ Increase in the rate reflects the low annual comparison point in June 2021
✓ 19 Local Authorities have price growth in excess of 10.0%
✓ Transactions are lower than in June 2021 – but that was a bumper month
✓ Argyll and Bute has highest growth rate at 25.5%
• The Walker Fraser Steele Acadata House Price Index (Scotland). Please refer to the Notes at the end for information on content and methodology.
• Walker Fraser Steele is the trading name of e.surv Chartered Surveyors in Scotland.
Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “June is the mid-point in the calendar year, the summer solstice marking when the sun is at its most northerly point – but will this June also herald a change in temperature for the housing market in Scotland? Possibly.
“Average house prices continued to rise in June, but only by 0.4% (£950) to £221,900 accompanied by a slight downturn in the total number of transactions – compared admittedly to an unusually high number in June last year.
“Added to this, four of the bottom five local authorities by value saw prices fall in June, suggesting that the lower end of the market is running out of steam. However, looking in the round, whilst the number of transactions may be cooling, continued lack of supply and strong demand, particularly for higher value, spacious properties, is fuelling individual prices.
“There were 70 sales in excess of £750,000 in June alone, the highest annual increase in average house prices recorded in Argyle & Bute, up 25.5% over the year, with June seeing three high value houses go for well over the asking price. In fact, for the year to date there have been 453 sales in excess of £750,000 in Scotland, over half (228) in Edinburgh, driving the underlying rise in average house prices which have increased by 10.5% (£21,000) on an annual basis.
“As we move into the second half of the year it will be interesting to see the impact of reduced competition at the lower end of the market on properties higher up the value chain. However, to date, the sun continues to shine almost unabated as restricted supply remains the dominant factor for house prices across Scotland.”
Commentary: John Tindale, Acadata Senior Housing Analyst
The June housing market
The average price paid for a house in Scotland in June 2022 is £221,900, establishing yet another record price for the country – the twelfth occasion that this has happened in the last twelve months.
This price is some £21,000 higher than that seen in June 2021, indicating that prices have risen by 10.5% on an annual basis. This annual growth rate is the highest recorded to date in 2022, but it has been elevated by a near £3,000 fall in prices that occurred twelve months earlier in June 2021, meaning that the base point for measuring the annual growth rate started from a particularly low level.
In fact, the average house price only rose by some £950, or +0.4%, in June 2022 – the lowest monthly increase of this calendar year.
Figure 1. The average house price in Scotland over the period June 2020 to June 2022 (Link to source Excel)
As discussed, there would appear to be a minor slowdown in the number of transactions that took place in June 2022, compared to the previous year – although June 2021 had set a new record level for the month, and was also the fourth-highest monthly total of the previous ten years, so the bar to clear had been set extremely high.
On page 5 we show that the number of high-value transactions are similarly seeing a minor slowdown, but again the June 2021 total was always going to be hard to exceed. However, the June 2022 total is the second month of this calendar year in which the total number of high-value sales is not the greatest for the month of the eight years shown.
Nevertheless, the desire to live in properties with plenty of space, generally meaning the purchase of high-value detached properties, continues. Frequently, the achieved selling price then exceeds that of the guide price, likely indicating that there has been competition for properties with the requisite characteristics.
New instructions to sell remain relatively thin on the ground, so maintaining the tight supply conditions, and hence supporting the monthly increase in house prices. The latest RICS UK Residential Survey does not anticipate that this pattern will change “for the time being”.
Annual change
The average house price in Scotland increased by some £21,000 – or 10.5% – over the last twelve months, to the end of June. This is a near £4,000 increase over the £17,000 growth in prices seen in the twelve months to the end of May 2022 – but prices in June 2021 fell by £3,000 from May 2021, so the base starting point for measuring annual changes in value was already at a relatively low level, making it more likely that prices would show an increase twelve months later.
In June 2022, 30 of the 32 local authority areas in Scotland saw their average prices rise over the levels seen twelve months earlier – the two exceptions being Na h-Eileanan Siar and Inverclyde, although the average property price in Na h-Eileanan Siar only fell by £5 over the year. These two areas are currently bottom of Table 3, meaning that they have the two lowest average property values of the 32 local authority areas in Scotland. As we suggested last month, this may indicate that the competition between buyers for homes is not so intense at the lower end of the price spectrum.
The area with the highest annual increase in average house prices in June 2022 was Argyll and Bute, where values have risen by 25.5% over the year. This is the third month in succession that Argyll and Bute has recorded the highest annual change in prices, having been assisted in this process by a number of high-value sales achieving prices above their guide levels. This again occurred in June, with a five-bedroom detached home on the Isle of Bute having an asking price of £700,000 but selling for £830,000. Three examples, in the same area, show the way in which competition for homes in attractive locations can result in a noticeable increase in average house prices.
On a weight-adjusted basis, which employs both the change in prices and the number of transactions involved, there are five local authority areas in June that account for 42% of the £21,000 increase in Scotland’s average house price over the year. The five areas in descending order of influence are: – Edinburgh (13%), Glasgow (11%); South Lanarkshire (7%); Fife (6%); and Perth and Kinross (5%).
Monthly change
In June 2022, Scotland’s average house price in the month rose by some £950, or 0.4%, continuing the pattern of minor upward oscillations in property values on a monthly basis. The average price in Scotland now stands at £221,900, which sets a record level for the nation for the twelfth month in succession.
In June 2022, 18 of the 32 Local Authority areas in Scotland experienced rising prices in the month, three fewer than in May. The largest increase in average prices in June, of 7.4%, was in Perth and Kinross, where the average price of detached homes increased from £350k in May to £380k in June. The average price for homes was elevated in the month by the sale of a four-bedroom local architect designed detached property near to the Bridge of Cully, which sold for its asking price of £1.3 million.
At the other end of the scale, the lowest increase in average prices in June, of -7.4%, was in Inverclyde. In Inverclyde the price of detached homes fell from an average £360k in May to £300k in June – however, only two detached homes were actually sold in the area in June – which explains why the movement in average prices was so exaggerated. Flats are the most frequently purchased property type in Inverclyde, and these increased in price from an average £78k in May to £82k in June – a far more reasonable movement in prices over the month.
It is interesting to note that four of the bottom five local authorities by value all saw prices fall in the month, which as we commented earlier suggests that the lower-priced sector of the market is not seeing the same level of competition as is being experienced at the higher end of the market, thus allowing prices to fall.
Peak Prices
Each month, we highlight the local authority areas which have reached a new record in their average house prices. In June, there are 13 such authorities, four less than in May. We can also add that Scotland itself has set a record average price in June 2022 – the sixth of this calendar year.
Heat Map
30 of the 32 local authority areas in Scotland have seen a rise in their average property values over the last year, the two exceptions being Na h-Eileanan Siar and Inverclyde.
The highest increase over the twelve months to June 2022 was in Argyll and Bute at 25.5%. 19 of the 32 local authority areas had price growth in excess of 10.0%.
Veterans and disabled people among those to benefit
Changes to a shared equity scheme will mean disabled people, first-time buyers and others on low to medium incomes will have an increased opportunity to buy a home that meets their needs.
From today, the threshold of the Open Market Shared Equity Scheme – which allows people to buy a home without having to fund its entire cost – has been raised by 9% across the country to reflect rising house prices. The scheme is aimed at priority groups who need support to buy their own home.
Applicants will also be able to make offers on properties above the formal valuation amount, where they have funds available. People who have an application in progress do not need to reapply to benefit from the changes.
Housing Secretary Shona Robison said: “These are positive changes which will put applicants on a more level playing field with other buyers when purchasing an affordable home.
“We are well aware of the rise in house prices and we have listened to people’s feedback. That is why we are acting to make the process fairer and to offer a helping hand in challenging times.
“Our evidence-based approach ensures that the scheme continues to be targeted at priority groups and to ensure that, across Scotland, all areas are able to benefit from a viable scheme with a reasonable number of purchases.
“The Scottish Government delivered 111,750 affordable homes between 2007 and 2022, with more than 78,000 for social rent. Progress has started towards our next ambitious target of delivering 110,000 affordable homes by 2032, of which 70% will be for social rent and 10% in remote, rural and island communities.”
Proposals for another ‘net zero’ housing development, as part of the City of Edinburgh Council’s £1.3bn Granton Waterfront regeneration project, have been granted approval by city planners.
This major milestone follows the start of construction work at the £72m, 444-home ‘Western Villages’ project, which is also part of the local authority’s wider regeneration of the area. Over the next ten years 3,500 mixed-tenure homes and associated infrastructure will create a new, sustainable coastal community.
Hart Builders will start work on site in 2023 at Silverlea to deliver 142 high quality sustainable homes, including wheelchair-accessible ground-floor dwellings in a mix of social rent (91) and mid-market rent (51) each benefitting from coastal views and access to parkland.
Cllr Jane Meagher, Housing, Homelessness and Fair Work Convener, said: “I’m delighted with today’s decision. We’ve reached another major milestone on our Granton Waterfront project to deliver much needed sustainable affordable housing in the area. I recently visited our Western Villages development nearby and was very pleased to see we’re already starting work there to deliver 444 net zero homes on the site.
The homes that we build here will make such a difference for wheelchair users and others who find it so difficult to get a home that meets their needs. Our proposals for the site have been carefully designed to improve the quality of the surrounding green space and to make it easier for people to walk or cycle around the area.
Councillor Jane Meagher, the city council’s Housing, Homelessness and Fair Work Convener, writes:
After a slowdown during the pandemic, it’s great to see so much work underway to build the new affordable and sustainable homes our growing city needs.
Last week I had the pleasure of marking the site start for our newest housing development – Western Villages at the new Granton Waterfront. Spanning a site the same size as the New Town, this regeneration of the waterfront really is going to create a brand new coastal community.
This is growth which will benefit those who already live in the area and the city as a whole and I have to say, it’s incredible to watch the start of construction. There is a team of people working extremely hard so that, over the next decade, we’ll see drastic change and thousands of people move into beautiful new homes.
They will join a 20-minute neighbourhood where they can shop, socialise, and access support. With our partners we’re investing millions in the area, including the fantastic gas works holder, which will become an amazing spectacle; a home for events and a glowing beacon for North Edinburgh below everyone who flies into the city.
I am strongly committed to doing what I can to secure more affordable homes for Edinburgh. Over 150 households bid for every Council and housing association home that becomes available so that’s why we’re driving forward with building new affordable homes on sites across the city.
Close to Granton, in nearby Pennywell and Muirhouse, new homes and a new civic centre are taking shape. We’re also investing in improving existing homes with major works underway in both multi storey blocks and low-rise housing.
As the city grows, the demand we are seeing for affordable and social homes is only going to increase. That is a reality we must face, not least with the country in the grip of a cost-of-living crisis and fears of recession on the horizon.
It’s why it’s critical the Council and its partners press ahead with a truly ambitious and forward-thinking housebuilding strategy and it’s why we must continue to make the case for increased investment in this programme to the Scottish Government. Our capital city, after all, is per head the lowest funded local authority in Scotland.
The way we’re building homes is also changing, with innovative measures being used to reduce energy. Western Villages is a great example of that, as Scotland’s largest net zero development. We want the whole city to become net zero carbon by 2030 so we are committing to ‘build smarter’ and create new homes which are greener and use eco-friendly technology.
This construction work is also helping to boost and create new jobs and apprenticeships which will further help us to support people into employment and keep our economy resilient, which is particularly significant after the impacts of Covid.
The future is challenging, but together with developers and others we are doing everything within our powers to make it fairer on residents and on our environment. We’ll keep working to tackle our housing pressures and deliver these affordable and sustainable new homes.
This article first appeared in the Edinburgh Evening News
Scotland faces a “monumental but essential task” if it is to overhaul its aged housing stock and find practical solutions to reduce emissions and address the climate emergency.
The Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights was the keynote speaker at the launch of the five-day renewables event, which has been organised by the Construction Industry Collective Voice (CICV).
Speaking to delegates at the Scottish headquarters of the Royal Institution of Chartered Surveyors (RICS), Mr Harvie outlined the scale of the challenge and some of the measures the Scottish Government was taking to try and tackle today’s environmental issues.
The Scottish Greens co-leader said: “Our homes and workplaces account for around a fifth of Scotland’s total greenhouse gas emissions. Our statutory target for 2030 means that we need to reduce emissions from heating buildings by 68% below their level in 2020.
“This is a monumental but essential task. Our building stock is relatively old, and wasn’t always built to high energy standards. This legacy of poor energy efficiency has contributed to emissions and fuel poverty, so we need to start drastically improving that standard.
“By 2030, we want to see a large majority of homes achieving a level of energy efficiency at least equivalent to an EPC C – with all homes meeting that standard by 2033, where feasible and cost effective. This will reduce emissions from our buildings, but it will also help make our energy more affordable, by removing poor energy efficiency as a driver of fuel poverty.”
Mr Harvie, who is a list MSP for the Glasgow region, also warned that, as well as improving energy efficiency, Scotland needs to switch to zero direct emissions heating.
He said: “Meeting our 2030 target means that we need over a million homes and the equivalent of 50,000 non-domestic buildings to switch from fossil fuels. This is a huge transition, affecting communities, businesses and homes across Scotland.
“Getting there will need a much faster installation rate for these zero direct emissions heating systems. In recent years that rate has been around 3,000 homes annually, but we need to reach around 200,000 each year in the latter part of this decade.”
Mr Harvie also said that the cost of living crisis and unprecedented surges in energy prices make the challenge even harder and the government can’t foot the bill on its own.
He said: “Our funding will make a huge difference to the heat transition. But the cost of transforming our building stock – around £33 billion to 2045 – can’t be met by government alone.
“Our Green Heat Finance Task Force is now working on innovative solutions to maximise private sector investment, and to find new ways to help spread the upfront cost of making properties warmer, greener and more energy efficient.”
Mr Harvie concluded: “We know there will be more issues to resolve and we intend to tackle these collaboratively, drawing on the best knowledge and ideas from across society.
“The climate emergency is already here. But if we adopt many of the actions and ideas being discussed at this week-long Green Home Festival, they will stand us in good stead to mitigate its worst consequences.”
Mr Harvie was guest of honour at the event at 10 Charlotte Square in central Edinburgh, where delegates gathered to kick of a week-long series of events delivering practical assistance and advice to help Scotland become a net zero nation.
Mr Nelson said: “We were grateful to Mr Harvie for opening the Festival and we share his view that the time for waiting is over and urgent action is needed now.
“It is more important than ever that the construction industry and government work together to find practical solutions that help us build the net zero nation needed for future generations.”
The Green Home Festival will deliver 12 in-person and virtual presentations on green topics, targeting homeowners, construction professionals, housing associations and local authorities.
One online session, Taking the SwedishView, will see a presentation by award-winning Swedish construction company, Botkyrkabyggen, who use solar panels, windmills, artificial intelligence and district heating to improve energy efficiency.
In another event, Living Safely in the Future, experts from Electrical Safety First will outline what householders can do to ensure their homes are protected properly when installing the innovation and technology that is already becoming a part of everyday life.
Full details, including how to book tickets for each event, are available on the Festival’s website at greenhomefestival.co.uk.
The festival is the latest in a string of practical and constructive initiatives launched by the CICV since its creation at the start of the pandemic in March 2020.
Made up of 29 trade associations, professional services bodies and companies, it has maintained a steady supply of information and practical advice to the sector as well as carrying out surveys, producing animations and posters, hosting webinars and maintaining close dialogue with Scottish Government ministers.
Planning permission required for Edinburgh’s short-term let conversions
A measure to help maintain the availability of long-term residential housing in Edinburgh has been approved.
Edinburgh will become Scotland’s first designated Short-Term Let Control Area after the Scottish Government approved the City of Edinburgh Council’s proposed change to planning requirements.
The control area is intended to preserve the character of neighbourhoods, prevent short-term lets in inappropriate places or types of building, and help ensure homes are used to their best effect. With a few exceptions, changing the use of an entire residential home in the city to short-term letting will automatically require planning permission.
Housing Secretary Shona Robison said: “Edinburgh was the first local authority in Scotland to propose a Short-Term Let Control Area and Scottish Government approval represents a major step forward.
“We have committed to give local authorities the powers to address concerns about the impact of commercial short-term letting in their communities, should they want to do that. This is an example of that local choice in action – supported by the majority of respondents to the council’s consultation on the proposed designation.
“I recognise the important role which short-term lets play as a source of flexible and responsive accommodation for tourists and workers, which brings many benefits to hosts, visitors and our economy. However, we know that in certain areas, particularly tourist hot spots, high numbers of lets can cause problems for neighbours and make it harder for people to find homes to live in.
“The Scottish Government considers that the council has adequately considered and responded to concerns raised before seeking approval of the control area designation. We have concluded that the proposed designation would be reasonable.”
Leith MSP Ben McPherson said: “As a constituency MSP, after being part of an Edinburgh SNP team who have pushed for action on this for some time, I’m pleased that today it has been confirmed by The Scottish Government that Edinburgh will become Scotland’s first designated Short-Term Let Control Area.
“Planning permission will be required for Edinburgh’s short-term let conversions. This measure will help maintain the availability of long-term residential housing in Edinburgh.”
City Council Leader Cammy Day said: “This is the news we have been waiting for after leading the way in campaigning for change. I am delighted that Ministers have answered our calls and we look forward to reviewing the full details included in the decision released today.
“It paves the way for Edinburgh becoming the first short-term let control area in Scotland. For far too long, too many homes have been lost in our city to the holiday market. In fact, around a third of all short term lets in Scotland are here in the Capital, so their associated issues of safety, anti-social behaviour and noise have a detrimental effect on many of our residents. We will now progress implementing the changes and the next step should be looking at whether we can apply a cap on numbers, too.”
The control area covers the entire City of Edinburgh Council area. Where a dwellinghouse is in a control area, a change of use to secondary letting will always require planning permission unless the exceptions set out in legislation apply.
Where the change of a dwellinghouse to a short-term let took place before the designation of the control area the existing planning rules will apply. These require planning permission for a change of use of property where that change is a material change in the use of the property.
An app to help the owners of shared properties repair their buildings in the Capital has been so successful in its first year it is already being rolled out by two other local authorities in Scotland.
Developed by the City of Edinburgh Council with tech company Novoville, a new app launched in April last year has been helping more than 500 tenements with nearly 5,000 properties across Edinburgh in carrying out £700,000 worth of much needed repairs to improve their buildings.
The app has been so popular that Perth and Kinross and East Ayrshire Councils have announced today they are launching it as well.
Born out of the Scottish Government’s CivTech Accelerator programme, the app was designed to make it easier for residents living in shared properties to keep their buildings in good condition. It’s attracted twice as many privately owned tenements in a year as the Council usually deals with in that time frame.
The repairs carried out range from £50,000 for extensive roof repairs down to £200 for new door locks, through to £20,000 improving stonework, £5,000 repainting stairwells to £2,000 on new gutters. Around 150 trusted traders are listed on the app but you can use it with your own trader as well.
Councillor Mandy Watt Finance and Resources Convener said: “Edinburgh is leading the way in this work in Scotland and it is great news that two other councils are now about to launch it in their area as well. Our Shared Repairs Team is doing a fantastic job helping people who live in shared buildings through the steps they need to take to carry out repairs to their properties.
“The app helps people take greater control of the process. It’s very accessible and easy to use.
“Edinburgh has around 170,000 tenement flats and other shared buildings with multiple owners. It’s great to see so many property owners already engaging with the app, as many of these buildings are in need of urgent repair.
“The feedback I’m getting is that without the app, some people say they wouldn’t have had the confidence to approach neighbours and get the repairs done, or the process would have taken a lot longer due to communication breakdowns and uncertainties about the correct course of action.”
Louis Daillencourt from Novoville said: “It’s been a pleasure to work with Edinburgh proprietors in the last year to help them fix often longstanding issues, keep their buildings safe, and make them more comfortable. Thanks to their feedback, we’ve learnt a lot and invested towards making the app ever simpler to use.
“This year, we’re progressing on multiple fronts. First, we’re deploying in more local authorities, collaborating with their private sector housing teams to make the app available to more and more owners around the country.
“We’re also continuing to work with consultants, architects and surveyors to ensure proprietors get the programme of work and maintenance plan their building needs. But in the wake of COP26, we’re also working on an absolutely critical development: making energy-efficiency upgrades accessible through the app.”
App user Julia Morrison said: “Truth be told, our stair is quite analogue – particularly older landlords! Despite my best efforts, I was only able to get a few folks signed up directly to the Novoville app. However, the app is designed so that you can use it with owners who don’t want to sign up to the app directly.
“This means you can still use it to download a suite of template letters, organise your processes, and – most importantly – your payment collections. And for those that did sign up, it was a really smooth process and easy to use. Very few glitches/fixes for a new product. I work in digital communications and I know how rare this is, Novoville have done excellently!
“The best thing about the app was feeling really supported in doing something that felt quite difficult and that didn’t come naturally to me. The team at Novoville had my back the whole time.”
App user Lizzie Crawford said: “I started using the app for one property in a tenement block where I am the landlord, and now I’ve got all three of mine in there! It’s much, much easier to look after the tenements where I own and let out a flat.
“The app is helping me create a bit more of a community feel in those blocks as well. I really recommend it to any proprietor. Apps can be daunting, but this is actually easy to use.”
Annual Scottish house price growth now 8.4% – highest in 2022
Average Scottish house price is £220,870,
Second-highest number of May transactions in last 10 years
21 of 32 Local Authorities had rising prices in the month – same as in April
Largest annual increase at 22.6% in Argyle & Bute
17 Local Authorities reached peak prices – 3 more than in April
Scott Jack, Regional Development Director at Walker Fraser Steele, comments:“One would never claim any market is bullet proof but on the current evidence Scotland’s property market remains at the very least in robust form. The rise in interest rates and the increase in the cost of-living are not yet having a marked impact on house price growth.
“The average price paid for a house in Scotland in May 2022 according to our data is £220,870, establishing yet another record price for the country – the eleventh occasion that this has happened in the last twelve months. This price is some £17,100 higher than that seen in May 2021, meaning that prices have risen by 8.4% on an annual basis. This annual growth rate is the highest recorded to date in 2022.
“The market transaction data too is robust – defying any expectations of a slow-down on this evidence. The provisional figure for May 2022 is 9,092 transactions, which is the second highest May figure of the last ten years – the highest having taken place in 2019, being the year before the pandemic struck.
“Ultimately demand is strong, but the supply of desirable stock remains low. Property prices are therefore seemingly more resilient in the face of rising borrowing costs.
“Over and above homebuyers, property remains attractive to investors too as it continues to outperform other assets such as equities, which are affected more acutely by higher borrowing costs.”
Note:The Walker Fraser Steele Acadata House Price Index (Scotland) provides the “average of all prices paid for houses”, including those made with cash.
Table 1. Average House Prices in Scotland for the period May 2021 – May 2022
Commentary: John Tindale, Acadata Senior Housing Analyst
The May housing market
The average price paid for a house in Scotland in May 2022 is £220,870, establishing yet another record price for the country – the eleventh occasion that this has happened in the last twelve months.
This price is some £17,100 higher than that seen in May 2021, meaning that prices have risen by 8.4% on an annual basis. This annual growth rate is the highest recorded to date in 2022, although rates for the ten months from February 2021 to November 2021 inclusive were at the same level or higher – see Figure 1 below – with the blue horizontal line highlighting May’s growth rate of 8.4%.
Figure 1. The annual rate of house price growth in Scotland over the period May 2020 to May 2022 with trendline
On a monthly basis, prices in May 2022 rose by 1.0%, or close to £2,300. This monthly increase is almost double that recorded in April (0.6%), with rates currently oscillating on a monthly basis from December 2021 onward.
As we show on page 4, transactions remain relatively strong, with April sales being at a ten-year high for the month. Data for May sales have not yet fully emerged from the Registers of Scotland, but preliminary figures suggest that the total for the month will also prove to be amongst the highest of the last ten years.
We show on page 5 that high-value transactions are, in general, continuing to occur at record levels in 2022, compared to the previous seven years, with Edinburgh accounting for 50% of all sales in Scotland having a value of £750k or higher.
Transactions analysis
Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to May 2022, based on RoS (Registers of Scotland) figures for the Date of Entry. (May 2022 totals are based on RoS Application dates.)
During the month of May, RoS has been processing further registrations with an entry date of April 2022, which provides us with an update on the number of transactions that took place in the month. The latest total for Scotland during April 2022 is now 8,232 sales, which is the highest number in the month of the last ten years. This suggests that the housing market in Scotland remains resilient, despite the potential headwinds of interest rate rises and the cost-of-living increases, which have been widely publicised in the press.
The provisional figure for May 2022 is 9,092 transactions, which is the second highest May figure of the last ten years – the highest having taken place in 2019, being the year before the pandemic struck.
In general, the peak month for sales in Scotland is August, with an average 9,350 transactions, so we can anticipate reporting on a slow build in the number of properties being sold over the next three months.
RICS (Royal Institution of Chartered Surveyors) in its May Residential Market Survey, is reporting that buyer enquiries are currently negative in Scotland, indicating there is less demand for homes this month, compared to a positive score seen over the last three months. However, RICS also notes that new vendor instructions are similarly lower this month, compared to the previous three months. On balance, RICS believes these two indicators are likely to balance each other out, leaving little change in house prices.
Figure 2. The number of sales per month recorded by RoS based on entry date (RoS applications date for May 2022), for the period 2015 – 2022. (Source: Registers of Scotland.)
Scotland transactions of £750k or higher
Table 2. The number of transactions by month in Scotland greater than or equal to £750k, January 2015 – May 2022
Table 2 shows the number of transactions per month in Scotland which are equal to or greater than £750k. The threshold of £750k has been selected as it is the breakpoint at which the highest rate of LBTT becomes payable.
Table 2 shows that there were 58 sales in excess of £750k during May 2022, and we anticipate that this number will increase as further sales for the month are processed by the Registers of Scotland. It is therefore quite likely that, excluding March 2021, we can report that in every month in 2022 there has been an increase in the number of properties sold in excess of £750k, compared to the same month from 2016 onward. The reason that March 2021 is excluded from the analysis is that it was exceptional, with sales being enhanced since it was the final month in which purchasers could take advantage of the LBTT tax holiday.
The rise in the number of high-value homes being purchased in 2022 is an indication that the “lifestyle changes” associated with the pandemic – “working from home” and the “race for space” – are still strong features of the current housing market. This, as we discuss on page 7, has resulted in strong competition for the properties that meet these requirements, with substantial price rises being seen at the top-end of the market.
The five authorities with the largest number of the 355 high-value sales that have been recorded to date in 2022 are: Edinburgh (179); Fife (21); Glasgow City (21); East Lothian (20); and finally East Renfrewshire (15). It can be seen from these figures that in 2022, Edinburgh accounts for just over half of this sector of the housing market.
Local Authority Analysis
Table 3. Average House Prices in Scotland, by local authority area, comparing May 2021, April 2022 and May 2022
Table 3 above shows the average house price and percentage change (over the last month and year) by Local Authority Area for May 2021, as well as for April and May 2022, calculated on a seasonal- and mix-adjusted basis. The ranking in Table 3 is based on the local authority area’s average house price for May 2022. Local Authority areas shaded in blue experienced record average house prices in May 2022.
Annual change
The average house price in Scotland has increased by some £17,100 – or 8.4% – over the last twelve months, to the end of May. This is a £1,500 increase over the £15,600 growth in prices seen in the twelve months to the end of April 2022
In May 2022, 31 of the 32 local authority areas in Scotland saw their average prices rise over the levels seen twelve months earlier – the one exception being West Dunbartonshire, where prices fell by -0.1%. In West Dunbartonshire, it was the average price of terraced properties that saw the most significant fall, from an average £130k in May 2021 to £120k twelve months later.
The area with the highest annual increase in average house prices in May 2022 was Argyll and Bute, where values have risen by 22.6% over the year. Last month we reported on the sale of a 5-bedroom detached home, located just outside Oban, in Argyll and Bute, having an asking price of £485,000, but selling for £600,000. This month there is a further example, with a five-bedroom detached property in Colintraive, overlooking Loch Riddon, having a guide price of £550,000, but being sold for £650,000. Two examples, in the same area, of the way in which competition for homes in remote beauty spots can result in a noticeable increase in average house prices.
On a weight-adjusted basis, which employs both the change in prices and the number of transactions involved, there are five local authority areas in May that account for 44% of the £17,100 increase in Scotland’s average house price over the year. The five areas in descending order of influence are: – Edinburgh (16%), Glasgow (8%); Fife (8%); South Lanarkshire (7%); and Argyll and Bute (5%).
Monthly change
In May 2022, Scotland’s average house price in the month rose by some £2,300, or 1.0%, which is near double the 0.6% increase seen in April. The average price in Scotland now stands at £220,870, which sets a record level for the nation for the eleventh month in succession.
In May 2022, 21of the 32 Local Authority areas in Scotland experienced rising prices in the month, the same number as in April. The largest increase in average prices in May, of 9.6%, was in Stirling, where the average price of detached homes increased from £377k in April to £417k in May. The average price for detached homes was elevated in the month by the sale of a five-bedroom detached Victorian villa in the King’s Park area of Stirling, for £875k, the third-most expensive property of the calendar year.
It is interesting to observe that the bottom four authorities in Table 3 above, which represent the four lowest priced areas in Scotland, have all seen price falls in the month – perhaps suggesting that the competition between buyers for homes is not so intense at the lower end of the price spectrum.
Peak Prices
Each month, in Table 3 above, we highlight in light blue the local authority areas which have reached a new record in their average house prices. In May, there are 17 such authorities, three more than in April. We can also add that Scotland itself has set a record average price in May 2022 – the fifth of this calendar year.
Heat Map
The heat map below shows the rate of house price growth for the 12 months ending May 2022. As reported above, 31 local authority areas in Scotland have seen a rise in their average property values over the last year, the one exception being West Dunbartonshire. The highest increase over the twelve months to May 2022 was in Argyll and Bute at 22.6%.
Comparisons with Scotland
Figure 3. Scotland house prices, compared with England and Wales, Wales, North East and North West for the period January 2005-May 202
Figure 4. A comparison of the annual change in house prices in Scotland, England and Wales, Wales, North East and North West for the period January 2005–May 2022
Scotland’s Eight Cities
Figure 5. Average house prices for Scotland’s eight cities from February 2021–May 2022
Figure 6. Average house prices for Scotland’s eight cities May 2022
