Back in March we saw the fifth FSE Glasgow take place. After extending our self-build, residential and near prime offerings into Scotland In November 2018, it also represented the first time that we have exhibited at the event. And we certainly weren’t the only lender realising the potential attached to the growing Scottish lending arena.
Scotland has previously been ignored by many English-based lenders due to differing lending practices and idiosyncrasies in property law which provided some barriers of entry for those without the expertise, or will, to overcome them. Historically, it has been a market dominated by a handful of larger institutions and was an area lacking in residential, specialist and alterative lending options for far too long. Many of these gaps have been filled by flexible, forward-thinking lenders who, through a mix of technological advances and strategic partnerships, have been able to extend certain sections of their offerings across the border. Although it’s not just the more specialist lenders who are making an impact.
Legal & General recently announced that it has exchanged contracts on its first Build To Rent (BTR) scheme in Scotland as it seeks to meet the increasing demand for affordable, quality rental accommodation across the UK. Legal & General will forward fund Drum Property Group to deliver 324 apartments within Glasgow’s new Buchanan Wharf waterside regeneration area, which will also house the new Northern European hub of Barclays Bank. With Glasgow predicted to continue to see notable population growth, this is a good example of urban regeneration in practice, and how innovative schemes can deliver much needed homes whilst providing a positive long-term socioeconomic impact.
Focusing on the Scottish property market, investment is said to be remaining steady despite Brexit uncertainty. Data from JLL’s Q1 Capital Markets Scotland Snapshot showed that whilst investment volumes in the first quarter of the year were significantly down on same period in 2018, there are eight deals currently under offer on an off-market or targeted basis in Edinburgh and Glasgow.
In terms of the residential property picture, the outlook is even brighter. According to Savills Research, Scottish house prices continue to increase year-on-year and the official UK Index for Scotland has seen positive annual growth for the last 34 consecutive months. It also forecast an 18.2% growth across Scotland over the next five years, compared to 14.8% for the UK as a whole.
Further data from You Move showed that annual price growth has outperformed England and Wales every month since December 2017. Average house prices in Scotland rose by 3.2% over the year to January, rising by £5,675 to £184,324, up from £178,649 in January 2018. Transaction numbers for 2018 were slightly down compared to 2017 but the estate agent said there remained cause for optimism, with sales four% higher in the last quarter of the year than in the same period in 2017. Clackmannanshire recorded the largest rise at 16%, followed by the City of Edinburgh at 10.4%. Prices in Scotland’s capital city were suggested to be rising twice as fast as those in any other UK city within this time frame.
A survey conducted by the Post Office, and property-tech provider, Gazeal late last year also showed that properties in Edinburgh were selling on average within 39 days, compared to the average time of 102 days seen across the rest of the UK.
This raft of data contains some quite staggering statistics and outlines just how attractive the Scottish property market continues to be despite Brexit, and all its potential implications. There is little doubt that additional opportunities will present themselves in 2019 as the influx of new lenders are still flexing their muscles and battling for market share across many areas of the Scottish lending arena. Let’s hope that more Scotland-based intermediaries are well positioned to take advantage of them.
David Lownds is head of marketing & business development at the Hanley Economic Building Society