ASK513: Should I move North? Plus: Is Scotland a no-go?

0:00Hi, I'm Rob, and I'm Rob, and this is Ask Rob and Rob. Hey everyone, welcome to Ask Rob and Rob, the show where we get your questions in each and every week and we answer them, each week we'll answer them here on Ask Rob and Rob, but we'll also answer them in the Sunday Times as well, each and every Sunday, where you'll see our smiling faces beaming get you, where we give you a helping hand there as well. No matter the format, we love answering your questions and we keep it very easy for you to get your questions in. So easy, all you've got to do is go to probably hub.net slash ask, there you can leave us a written question for the Sunday Times, or if you really want to impress your friends, get your voice on the podcast just like Connor is about to do. Hi Rob and Rob, just a quick question in regards to Scotland, we've not heard much of them on Scotland recently, and I'm not sure if that's because of the Renters Reform build at Cayman in November 2025, or the changes that they're making in regards to Renters, riots and things like this and rental caps. But yeah, I just wanted to hear like your guys folks on it really, where you're thinking

1:01if there's any particular areas where are still good or the uncertainties, not ideal at the moment. Yeah, I just wanted to hear your guys folks on it really. Many thanks. Cheers. Connor, thank you for your question. And Scotland has been interesting over the past few years for sure. It's certainly the nation of the UK that is the furthest ahead or the most keen on rental protections, or you could put it another way and say the most anti-landlord. There was COVID, there's been this patchwork of emergency measures that's banned evictions or capturing increases, and you're right, that has quietened down a bit. But not because they've changed their mind, actually, they're putting something more permanent in law. There's something called the Housing Scotland Act, which is going to give local authorities the ability to designate themselves areas where there is extreme rental pressure. So areas can basically opt into this. And if they do, then renting increases are going to be capped at the rate of inflation plus 1% with a maximum of 6%.

2:02So if inflation is running super high, 6% is the maximum, but otherwise your annual increase is going to be inflation plus 1%. And the important difference here compared to what they've had with some of these temporary measures is that this is going to apply both within and between tendencies. So the crazy thing is that while all these temporary measures were in place to kind of cap rents, rental growth in Scotland was faster than anywhere else in the UK, because at the end of a tenancy, investors would put the rent up as much as they could because they didn't know when they'd next be able to. But now that cap is going to apply between tendencies as well, that's not come into effect. Yet it might be another year or so until it does, but it is going to make a difference. What I assume is going to happen is that we will see a continuation of another theme over the last few years, which is landlords selling up. So rental supply in Scotland has fallen and lots of the bigger operators who will come in and do build tarant schemes have withdrawn from Scotland because they feel it's just not worth it because of the regulatory environment. And it's created this situation where because there is demand and there is a lack of supply,

3:03yields are currently really strong. So if you look at the top ten list of the boroughs or post codes or whatever it is in the UK that have the highest yields, I think nine of them are in Scotland. So if you're looking for the highest return possible on paper at least, then Scotland is the place to be. The thing that puts me off though is that those are the returns now, but what will they be in the future? Returns are really good at the moment and affordability is good, but that rental growth is going to be capped. And if rental growth is capped, then that effectively caps capital values as well because from an investor's point of view, they are related to the rental income that property produces. So of course, there are lots of people who invest in Scotland, they've been doing it for a long time and they do perfectly well. You can absolutely make by to let work in Scotland. But for me, going into that environment, knowing that the returns that are so good today are essentially capped, knowing that capital values will probably struggle as a result, that would make me nervous. So I hope that fills in a few gaps for you and good luck with whatever you decide to do. Right, next up we've got a question in from Tim.

4:05I'm a single man living in London and I have about 30K in my life, sir. I'm about 30K a year. I'm looking at buying a place in Liverpool Manchester to take advantage of the cheaper property prices up there. I'm looking at buying a place with two bedrooms so that I can rent out to the room and help with the contribution towards the mortgage. I'm wondering what you thought of that possible arrangement. Thanks for the great content. Tim, thank you for your question. So for those who don't know what Alisa is, Alisa is a government incentive like an Alisa. In fact, it's a lifetime. That's where the name comes from. Well, you put money into maximum of around £4,000 per year and you can use that money with tax rates to get your own home, your first home. Now, it looks like Tim, that you're willing to move to a place where you can utilise that 30,000 to get your own home or it would say, first of all, is that you will be limited with that amount of money to what you can buy in those areas because while property

5:05is cheaper in Liverpool and Manchester compared to London, a lot cheaper. You still may need a bit more of a pot, but maybe another top up of a year or two or some extra cash that you've got will help you achieve that. Now, I'm going to be completely honest with you. This is set up for people to buy their own homes and it looks like you're willing to move to those areas to do that because you're talking about renting out a room. Now, Tim, I need to be honest with you, I'm not an expert when it comes to this tax break that the government offers, but my understanding is that if you live in this property, which says you're prepared to do and you let a room out that is allowed and that is possible, I've been the big question here is that are you prepared to uproot some move to an area just so you can get out of the property ladder? People do and that's absolutely fine. I would spend a lot of time looking at these areas where your pot will allow you to invest and see if you're prepared to live in those areas because you're not going to be living in the best parts of Liverpool or Manchester with that pot.

6:08You are going to live in areas that are cheaper and sometimes cheaper areas are cheaper for a reason. I'll leave it there without saying anything that's going to get me into trouble, but have a look. Go and visit those areas. Don't be buying through right move or street view. If you're going to live in these places yourself, you really need to understand what you're getting into. Is it a place that you're prepared to stay? So do go and put that time and effort in if this is something that you're serious about. But whatever you decide, I wish you the best of luck. Well, that is us done for this week and we'll be back to do it all again next Tuesday, but before then, you can join us for the property podcast on Thursday, so we'll see you then. Bye bye.