Better Yield Rentals in Scotland

In a recent article looking at the subject of rental yield in the North which featured a number of tables showing differences in the UK regional rental performance. In those tables, Scotland – or individual Scottish sub-regions – made numerous appearances, so we thought it might be time to take a closer look at the market.

Capital Growth In Scotland

According to Zoopla’s House Price Index, published on 28th September, the majority of Scottish properties have held their value well, despite the turbulent economic conditions. Across Scotland as a whole, prices rose by 2.3% year on year. 

House Price Projections

Soon after the pandemic began, commenters reduced their expectations of house price growth across the UK. For example, in June 2020, Savills published a 5-year forecast that projected a 7.5% fall in values across the board, including in Scotland.

However, the housing market has performed much more strongly than most people had imagined, supported by a boom in post-lockdown transactions and a reduction in the Land and Buildings Transaction Tax – Scotland’s equivalent of Stamp Duty. (As elsewhere, the LBTT holiday will continue until the end of March 2021.)

As a result of this resilience, house prices in Scotland have not fallen by 7.5%. In fact, thus far, they have risen by 1.8% according to Savills, which predicts a total gain of 2.0% by the end of the year. In consequence of these changing estimates, Savills published a revised forecast on 30th September. We have only shown the top 3 in each case, but the differences between the two forecasts are clear:

June Forecast:

5-year price growth forecast (%)
North West
Yorkshire & Humber

September Forecast:

5-year price growth forecast (%)
North West
27.3 (up 3.2%)
25.4 (up 5.3%)
Yorkshire & Humber
24.1 (up 3.0%)

By this forecast, prices in Scotland are expected to rise a total of 2% this year, to stay flat in 2021, and then to rise by 5.5%, 8% and 6% respectively in the succeeding years. The total gains of 25.4% push Scotland into second place overall.

There are good grounds for this expectation. Demand for housing greatly exceeds supply in Scotland, as it does in other parts of the UK, so the usual forces of supply and demand should continue to support rising values. Also, many of Scotland’s major university cities have developed high-tech, high-value sectors that are helping to sustain better paid jobs. These include sectors such as the digital industries, finance and life sciences – industries that are less susceptible to interruption by the pandemic. 

In September, Tech Nation published research commissioned by the Government’s Digital Economy Council. It found that 23% of the workforce in Edinburgh are employed in digital technology roles, while in Glasgow, the figure is 22%. 

Digit magazine reports that “more than 113,274 vacancies were advertised in digital tech positions across Scotland. Just under half of these were in Edinburgh and Glasgow… According to Adzuna data, 16.5% of advertised roles in Scotland are now in the tech sector. Demand for employees in engineering roles in Edinburgh has jumped by a quarter while Glasgow has seen particularly strong demand for DevOps engineers and engineers, up by 85% and 84% respectively.”

There has always been a strong link between average disposable incomes and average house prices, so this continuing shift to higher-skilled roles should help to keep capital values rising in many key Scottish cities. 

What’s more, prices in Scotland are starting from a lower base so, arguably, they have given themselves more room to grow. At the end of last year, Halifax reported that the affordability of housing in Scotland was better than almost anywhere else in the UK. Insider magazine noted that “prices in Scotland had a price to earnings (PE) ratio of 5.3, bettered only by Northern Ireland at 5.2. That compared with a UK average PE of 7.5 and London's 10.8.”

Gross Yields and Regional Trends

Of course, capital gains are by no means the only basis for choosing a property investment. Savills’ projection of 25.4% gains in the next five years is respectable, certainly, but most investors will also be giving careful attention to rental yield prospects. In this respect, Scotland is faring very well once again.

In a recent post, we used data from Zoopla and HomeLet’s Rental Index to calculate gross yields by UK region, and Scotland appeared in third place overall.

Area (August 2020)

Price paid


Gross Yield

Northern Ireland



North West







However, national and even regional averages are of very little use to an investor when it comes to deciding on an acquisition. Much more localised information is desirable, and we can start to obtain this from the LiveYield website, whose home page lists is top 10 locations for rental yield.

Its figures are regularly updated but, at the time of writing, nine of its top 10 were in Scotland.

Comhairle nan Eilean Siar
East Ayrshire
Orkney Island
South Ayrshire
North Ayrshire
Windsor and Maidenhead

TotallyMoney arrives at different figures but its Rental Yield Map still shows Scottish postcodes making a strong appearance. Top 10 performers include:

  • Falkirk FK2, taking second position overall, with yields of 9.51%

  • Glasgow G52, coming in third with 8.71%

  • Kilmarnock, in 6th place with 8.3%

The company notes that “a total of five Glasgow postcodes made it into the top 25, with the best performing being G52.”

However, not all Scottish cities are sure-fire winners. Aberdeen, for example, has produced good rental yields – around 7.2% according to TotallyMoney – but poor capital gains. (Locally, average prices actually fell by 0.6% year on year, according to the Zoopla House Price Index.) Clearly, it’s important to find a good balance.

In a September 2020 post titled “Revealed: the 10 highest-yielding areas in the UK”, Zoopla finds that three of the UK’s four best regions are to be found in Scotland.

Along with Middlesbrough in North Yorkshire, it reports that “East Ayrshire, North Ayrshire and Inverclyde, all in Scotland, offer the highest rental yields in the UK… They all provide a 7.7% gross rental yield, thanks to a combination of low property prices and a steady median monthly rent of between £450 and £476.”

The three Scottish regions “are closely followed by Glasgow and Stirling, where yields are 7.6% and 7.5% respectively.” In summary, five of Zoopla’s top six tips are located north of the border.

Key Scottish Towns and Cities

We’ve often made the point that the most promising opportunities aren’t always to be found in a country’s best-known cities. A well-chosen secondary market can be exceptionally rewarding, particularly for early investors who buy before others jump on the bandwagon and begin to push prices upward.

However, a notable characteristic of the Scottish property market is that prices in general tend to be much more affordable than in many other parts of the UK. Consequently, even those cities that are well known can still, potentially, represent good value. Since it’s beyond the scope of this article to consider all the promising investment hotspots in Scotland, what follows is a brief summary of some of the those featured in the rankings mentioned earlier.


Scotland’s capital comes fourth overall in Zoopla’s latest House Price Index, delivering year on year capital growth of 3.7%. This follows similar gains (3.5%) last year.

Average prices in Edinburgh are reportedly around £229,600 which is actually more than Zoopla’s UK mean of £218,300. Nevertheless, it still compares favourably against London, where prices average around £476,000.

Edinburgh’s key attractions include a buoyant economy, a pronounced concentration of high-value industries and a (normally) thriving tourism market. These all help to drive employment growth and rising disposable incomes. These, in turn, help to sustain rising capital values and increasing rents.  

Importantly, the city is also home to a large university student population, which adds further to demand for smaller rental properties. It also ranks consistently highly in league tables of culture, career opportunity and quality of life.

For investors, it offers a host of positive indicators:

  • Continuing growth in industries including data science, cyber security, robotics and stem cell research

  • One of the UK’s highest business start-up rates

  • Impressive productivity: over £70,000 GVA per worker

  • Lowest unemployment of any major UK city

  • The highest average disposable incomes outside of London.


As previously noted, five Glasgow postcodes made TotallyMoney’s top 25 for rental yield, so it’s a market where investors’ money clearly works hard. Zoopla estimates that prices here have risen by around 2.0% but they still carry an average price tag of just £119,100. That’s nearly a full £100,000 less than the national mean, so it’s hardly surprising that yields are so good.

TotallyMoney reports the following yields by postcode:

  • Glasgow G52: 8.71%

  • Glasgow G51: 7.32%

  • Glasgow G67: 7.20%

  • Glasgow G32: 7.13%

  • Glasgow G21: 7.10%

Looking ahead, rental growth is likely to rise in tandem with the city’s economic fortunes, which are improving thanks to investment in a number of high-tech sectors. These include:

  • Advanced manufacturing

  • Engineering and design

  • Financial and business services

  • Higher and further education

  • Life sciences

  • Low carbon industries

  • Tourism

Glasgow has an economy worth around £43 billion and it was recently named top large European city for foreign direct investment (fDi Intelligence 2020/21). The Glasgow Economic Strategy aims to make Glasgow “the most productive major city economy in the UK by 2023” and seeks to create 50,000 new jobs by 2023.


Sitting on the southwestern flank of Glasgow, the town of Paisley is by no means the biggest property market in Scotland but, nevertheless, it has been making a name for itself. TotallyMoney estimates that yields here are around 7.45%, putting it in the UK top 15, while prices are exceptionally low at an average of just £68,500. 

As a commuter town, it is well placed, lying just 12 minutes from the centre of Glasgow – Scotland’s largest economy and single most populous city. It’s also home to Glasgow International Airport and a busy community of high-value enterprises. What’s more, it is scheduled to see the creation of the Advanced Manufacturing Innovation District, Scotland’s first purpose-built zone for innovation, research and sustainable growth. This, together with a £39 million infrastructure project focusing on the airport, should drive rising employment and local economic growth.


Just 16 miles south of Paisley lies, Kilmarnock – another high-performing Scottish property hotspot. TotallyMoney ranks it sixth overall in the UK for yield. Prices here are exceptionally low, at around £64,995, which goes some way to explaining the estimated gross rental returns of 8.31%. 

Part of East Ayrshire, which LiveYield ranks in its UK top 5 for yield, Kilmarnock is set to see considerable economic growth as a result of the £251.5 million Ayrshire Growth Deal, which was signed in March 2019. It should see the launch of numerous important projects across the region. East Ayrshire Council estimates that the Deal will help to generate over 7,000 new jobs within the region. The funding will support growth in strategically important sectors including aerospace, smart manufacturing and engineering, digital infrastructure, digital automation, renewable energy and tourism.

New jobs and a growing economy are invariably good news for proper investors, since they help to boost demand for rentals and for housing in general, adding to upward price pressures.


These are just a few examples of potentially attractive property investment destinations in Scotland. However, an article like this can only ever offer a broad overview, and it inevitably misses out on all the detail that is so essential when making an investment choice. It is intended only as a resource to help investors who are looking to build a shortlist of possible targets for further research.

Most Scottish markets are competitively priced but affordability alone is not enough. There must also be credible evidence of strong rental demand and good prospects for sustained growth in both demand and annual rental returns. Happily, there are some very attractive property investment markets in Scotland, where precisely these conditions exist. This is particularly true of towns and cities that are focusing on more advanced skills and seeing sizeable expenditure on infrastructure and business growth. 

Further Information

If you’re considering property investment in Scotland or the North of England, please call our advisory team on 01244 343 355.

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