Riccardo Giovanacci: Glasgow property rental market remains an attractive proposition
The residential property letting market in Glasgow and its surrounds remains remarkably healthy, with continuing strong demand for accommodation, property professional Riccardo Giovanacci has revealed on an influential investment podcast.
Despite fears of UK-wide recession and concerns over tax disparities in Scotland compared to England, confidence is high and the city is an attractive prospect for new landlords or those wishing to enhance their portfolios, he said.
Mr Giovanacci, managing director of city centre-based Newton Letting, was asked for his market insights on the podcast of APW Property, an international group which has facilitated the purchase by 2,000 expatriates of UK property worth £186 million.
The show, available here, was hosted by media professional Paul Shearer, who has written for the FT and The Times, and focused on the best areas of Glasgow in which to invest and the likely returns which might be on offer.
Mr Giovanacci, whose firm manages around 600 properties on behalf of some 370 landlords and is aiming to increase his portfolio to 1,000 properties in the near future, said that an anticipated slowdown in the Glasgow market had not materialised.
He said: “It might have been thought at the end of last year, with so much grim economic news, that rental returns might be hit, but in fact the opposite has been the case. Yields are now in the region of 6% to 7.5%, though of course costs are going up as well.
“In common with the rest of the UK, there has been a post-pandemic return to the city, and a number of major employers have recently commenced operation. Barclays has a huge new facility, creating 6,000 jobs and players such as Morgan Stanley are boosting city’s reputation for international financial services.
“With sale prices also at an all-time high, a considerable number of ‘accidental landlords’ – for instance, people who might have inherited a property – have chosen to cash in and exit. This is creating opportunities for professional investors.”
Asked about the effect of the more punitive tax regime in Scotland, Mr Giovanacci said that the Scottish Government’s decision to increase the imposition on second home purchases from 4% to 6% would have to be taken into consideration by investors and has already deterred a number of transactions which were in process when the announcement was suddenly made.
He also pointed out that, while there was no Land and Buildings Transaction Tax (LBTT) on purchases under £145,000, the succeeding bands were significantly higher than in the rest of the UK – for instance a £750,000 property would attract a tax burden of 18%.
He said that the focus for those looking for capital growth had shifted over recent years from the South Side of the city to the East End, where rents and valuations in areas such as Dennistoun have benefited from ongoing gentrification.
He told Paul Shearer that, in a thriving city with good infrastructure, excellent employment prospects and an attractive quality of life, it remained a good time to buy from an investment perspective and, indeed, there was evidence that Glasgow was now generating interest from international investors.