Buying an investment property in Edinburgh: A guide for investors
Edinburgh’s thriving property market makes it an attractive destination for investors looking to buy a rental property. With strong tenant demand, a diverse range of properties, and steady price growth, the city offers excellent investment opportunities. Here’s what you need to know before making your move.
Best locations for investment
Your choice of location will depend on your investment goals. If you’re targeting students, areas near universities like Newington and Marchmont are ideal. For young professionals, the city centre, Leith, Gorgie and Stockbridge offer vibrant communities and great transport links.
If you’re looking for more affordable options with potential for growth, consider emerging areas like Granton or Portobello, where regeneration projects are increasing demand.
For information on prosperous places to invest in the capital, read our best property postcodes for Edinburgh investors blog.
Understanding buy-to-let mortgages
Financing an investment property often requires a buy-to-let mortgage, which differs from a standard residential mortgage. Lenders typically require a larger deposit (usually around 25%), and affordability is assessed based on expected rental income rather than personal earnings. Interest rates and fees can vary, so it’s important to shop around for the best deal or consult a mortgage adviser who specialises in buy-to-let lending.
Additional Dwelling Supplement (ADS)
Investors should also be aware of Scotland’s Additional Dwelling Supplement (ADS), an extra tax applied to purchases of second homes and buy-to-let properties. This surcharge is currently 8% of the property price and is payable on top of the standard Land and Buildings Transaction Tax (LBTT). While this increases upfront costs, it’s important to factor it into your budget when assessing potential returns.
