Failure to understand and comply with regulations surrounding the Scottish buy-to-let market could result in hefty fines, one expert has warned.
Writing in the Scotsman, David Borrowman, managing partner at law firm Caesar and Howie, has asserted that if a property purchased for rental purposes is to represent a secure investment with an assured rental yield then a number of checks should be carried out in advance of the transaction.
The concerns which need to be addressed are both budgetary and regulatory.
High on a future landlord’s checklist should be gaining a full understanding of tax bands and discounts available on a property, which can vary significantly in different areas, Mr Borrowman asserts.
For instance, council tax on new properties can "often be higher than expected", while rental discounts vary in different regions.
A second vital task for would-be landlords is the drawing up of a thorough short-term budget, taking into account such financial drains as initial set-up costs, advertising, agency fees and safety certificates.
Council registration fees, factor fees and the cost of drawing up a lease also need to be accounted for – while failing to register a property properly could result in "very large fines".
Additionally, long-term costs such as those associated with the upkeep of the property or ‘void periods’ – when the property is empty – should be addressed before entering into the market.
"It is a good idea to use an agent, but always remember that you get what you pay for, so don’t be afraid to ask your agent for references," Mr Borrowman remarks.
Finally, the solicitor recommends seeking references for all tenants, if possible from previous landlords, to prevent long and costly evictions processes in the event of a bad tenant.
Meanwhile, Landlord Mortgages has released research today which suggests that increased numbers of landlords are suffering repossessions resulting from proliferation of easy mortgages on the market.