Spotlight on Glasgow

As part of our ongoing series looking at residential investment opportunities and markets in different parts of the United Kingdom, UK Landlord talked to David Kendall, NLA Scotland Representative, about the area he knows best.

UKL: What should buy-to-let investors know about Glasgow?

David Kendall: The majority of my properties are within 3 miles of Hamilton, where I live.  The rental market is strong and on my new purchases I am able to achieve yields in the region of 7.5 per cent. The selling market remains slow but is showing some signs of improvement. 

UKL: What is your current investment strategy? 

D.K.: Two years ago I was buying repossessions; they were incredibly cheap and no one else seemed interested in them. Now repossessions are generating much more interest, agents are pricing them low and then if there are sufficient interested parties they go to closing dates which means that the final sale price will often be much greater than the original asking price. Therefore my strategy has changed and my four most recent purchases have all been properties which builders have taken in part exchange. This has become a popular way for builders to shift their stock and a stress-free way for people to sell their current home. Basically the builder gives the homemover the full valuation on their existing property and in turn the homemover pays the full asking price on their new property. The discount that the homemover may have been able to negotiate on their new property is then taken off the part exchange property and I get a bargain!  Often £15-£20k below market value, it’s a win-win situation all round. 

UKL: What advice would you give to anyone thinking of investing in an area different to where they live? 

D.K.:  Research the area very carefully, consider the time you will spend travelling and the cost of servicing the properties. I have six properties in Aberdeenshire, which is 180 miles from where I live. It works well because I have an agent I can trust and reliable tradesmen in the area. Without this local support, it would be impossible to work at such a distance. 

UKL: What advice would you give to landlords looking to maximise rental yields?

D.K.: You make your money on the purchase and the rental yield. Currently I only buy if I make an absolute minimum of £10k on the purchase and at least £150pcm profit after covering my mortgage and insurance etc. Property must be viewed as a long-term hold. The best advice is never sell, then you never pay CGT whatever the rate  – but it is a bit of a inconvenience to have to die to avoid tax! 

UKL: Have you made any investment mistakes and what lessons did you learn from them? 

D.K.: Yes, I bought a property specifically for a tenant, they promised me they would be staying for at least 5 years, but after 12 months they bought a house in the same street and I had to reduce the rent to secure a new tenant. This property produces my lowest yield. I now only buy if the property ticks all the boxes for my investment criteria.