Edinburgh flat prices soar in rush to beat second-home tax

Potential buyers peruse the properties on display at the ESPC shop in George Street. Picture: Jane Barlow
Potential buyers peruse the properties on display at the ESPC shop in George Street. Picture: Jane Barlow
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LANDLORDS and investors are rushing to snap up flats in the Capital ahead of the introduction of the second-home tax next month.

New figures from the Edinburgh Solicitors Property Centre (ESPC) show that while average property prices across east central Scotland have dropped by 3.6 per cent compared with the same period a year before, one and two-bedroom flats in Edinburgh have rocketed in price over the last three months.

The latest figures, which cover the period from December to February, revealed that properties in Leith – where the docklands and Shore area have been given an overhaul over the past couple of decades, attracting young first-time buyers as well as renters – performed strongly, driven by sales of one and two-bedroom flats, which rose by 10.5 per cent and 16.9 per cent respectively.

The second-home tax, which will charge holiday-home buyers and investors an extra three per cent on top of the existing Land and Buildings Transaction Tax (LBTT), will come into effect on April 1.

Meanwhile, a separate report published by Your Move found that Edinburgh had the highest selling price in Scotland in January, when the volume of sales Scotland-wide was at its highest level since before the recession in 2008.

The biggest uplift was in Midlothian, where the number of deals rose by 38 per cent compared with the previous year, driven by high demand for flats and terraced houses, according to the House Price Index – while the average selling price in Edinburgh reached £244,132 in January.

The ESPC said that Leith’s appeal to buy-to-let investors had driven sales – while the increase in the number of bars and cafes in the area attracted young renters.

Maria Botha-Lopez, spokeswoman for the ESPC, said: “The higher increases in property prices for one and two-bedroom flats could be attributed to increased demand ahead of the April 1 implementation of a three per cent LBTT supplement on second homes or additional dwellings.

“This is also the type of property sought after by first-time buyers looking for an affordable option to get on the property ladder.

“The short-term effect of this LBTT supplement, which aims to strengthen the first-time buyer’s position in the market, has instead increased average selling prices for those types of properties.”

One-bedroom flats in Polworth, Shandon and Tollcross have also seen average prices increase by 14.8 per cent, while two-bedroom flats in Newington and the Grange have seen average increases of 22 per cent.

Meanwhile, properties selling the fastest are one-bedroom flats in Morningside and two-bedroom flats in Fettes.

The ESPC said the market was still in favour of the seller with the average home sold within 38 days in Edinburgh over the period, while 63.4 per cent of sales met or exceeded their home report valuation.

jane.bradley@jpress.co.uk