With the heated property market of the past few years cooling considerably in the latter part of this year, October’s The Scotsman Property Podcast takes a look at exactly what is happening to house prices and delves beneath the averages, at the places and types of properties that are bucking the trend.
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00:00 (upbeat music)
00:02 - Hello, and welcome to this month's edition
00:04 of the Scotsman's Property Podcast
00:07 in partnership with DJ Alexander.
00:10 Each month, we try and take a deep dive behind the headlines
00:13 to bring you some expert insight
00:15 into exactly what's going on in the property market.
00:18 This edition, we'll be focusing on property values.
00:21 It seems that homeowners can no longer rely on market gains
00:26 to reliably increase equity.
00:28 So what is the best way to invest in your own home
00:31 no matter what the budget?
00:34 If you're thinking of selling or have a property to let,
00:38 what are the tried and tested fixes to garner interest?
00:41 But first, we're going to have a look
00:44 at how accurate reports of market fluctuations are
00:47 and how we can better interpret raw data on house prices.
00:52 My first guest is Dr. John Boyle,
00:54 head of research and policy at Reti & Co.
00:57 Welcome, John.
00:59 - Hi, Kirsty, hi.
01:00 - Hi, I'm going to ask you a very basic question first.
01:04 At the moment, what is the average house price in Scotland
01:09 and how has that compared to the last few years?
01:13 What's the direction of travel?
01:14 - Yeah, well, officially,
01:17 the Office for National Statistics
01:23 in its house price index, or its HPI,
01:26 calculates that the average house price in Scotland
01:28 is 192,000.
01:31 That's at July 2023,
01:35 which is almost unchanged on July 2022,
01:40 so it's up about 0.1%.
01:43 And the trend has been one of significant growth
01:48 since before the pandemic.
01:51 So before the pandemic,
01:53 the average house price in Scotland was less than 151,000.
01:57 So that's a 27% rise since March 2020.
02:02 And that was caused by pent-up demand
02:07 as well as race for space
02:09 and a low interest rate environment.
02:12 But that's leveled off in the last year,
02:15 so there hasn't been,
02:16 that's just a 0.1% uplift on last year.
02:21 So we're beginning to see that post-pandemic bounce now
02:25 level off.
02:26 - Yeah.
02:27 And sort of looking closely at the figures,
02:30 are there big differences?
02:32 That's an average price across the board,
02:35 but are there big differences geographically
02:37 in types of houses, in price ranges?
02:40 - Yeah, I mean, it varies across the country, obviously.
02:45 And if you look at the local authority areas,
02:48 in East Lothian, the average house price is up about 12%
02:51 on the last year.
02:52 So that area is still experiencing quite significant growth.
02:57 Whereas areas like West Dunbartonshire and Aberdeen,
03:04 which still has its own issues to deal with
03:07 after the oil price collapse in the mid 2010s,
03:12 they're down six to 7%.
03:16 So it's a kind of a mixed picture across the country.
03:20 You can also see some slight differences by property type.
03:23 So detached houses are continuing to rise,
03:26 they're up 2.5% a year, semi-detached up 1%.
03:31 Whereas terraces and flats,
03:32 they're down slightly on the year.
03:34 New build is also performing quite strongly.
03:38 So it's up, new build,
03:40 average new build price is up 14% on the year,
03:43 but that doesn't take account of incentive packages
03:46 that are now becoming much more common
03:49 in order to get new build sales away.
03:54 - Yeah, and buyers presumably finding
03:56 that it's easier to buy a new build property
03:59 in a lot of cases.
04:01 - Correct, yes.
04:03 I mean, in some areas, new build is just,
04:05 it's more available or people might be attracted
04:08 by the fixed price nature of it.
04:12 The prime market was also holding up better,
04:15 but even that is beginning now to be affected
04:18 really by the downturn because-
04:22 - What do you define as the prime market?
04:25 What price range is that?
04:27 - Yeah, I mean, there are different definitions of it,
04:30 but we typically take it as over 500,000,
04:33 which only accounts for a fairly small percentage
04:36 of sales in Scotland anyways.
04:38 You're only talking maybe about 2% to 3% sales.
04:41 And then you've got your kind of super prime market,
04:44 which is a million plus.
04:47 But again, the number of sales
04:48 in the million plus category in Scotland is very few.
04:56 It's under 1%.
04:57 - Yeah, and is Scotland a separate story
05:01 from the rest of the UK?
05:02 - Not really, no.
05:06 I mean, the average UK price,
05:07 because it takes account of the likes of London
05:09 and the Southeast of England,
05:11 is much higher.
05:12 You know, it's about 290,000,
05:14 which is about 100,000 more than Scotland.
05:18 Prices seem to be correcting more
05:20 in the likes of London and the Southwest.
05:23 And they're still rising in the likes of Northeast
05:27 of England and Yorkshire and Humber.
05:29 In both of those areas,
05:30 they're up over 2% in the last year.
05:34 But there isn't a significant difference really
05:37 between movements in the other nations
05:42 and English regions.
05:45 They all tend to be clustering around
05:50 the same level of market change.
05:52 - Yeah.
05:53 I wanted to ask you about these average prices.
05:55 It's something that I've always wondered.
05:57 In a comparatively cool market,
05:59 as we're experiencing now,
06:01 where the volume of sales is lower,
06:04 I think I'm right in saying,
06:06 are the figures representative
06:09 or can they be skewed by,
06:11 sometimes the circumstances of sellers
06:13 are different in a cooler market.
06:16 It might be people who have to sell,
06:18 you know, the three Ds,
06:20 divorce, debt, death.
06:22 People who are perhaps not in a position to hold out,
06:27 especially with rising interest rates,
06:28 people who are struggling with that
06:30 and who have to sell
06:32 because of their financial difficulties
06:34 may not be able to hold out for a good price.
06:38 And does that sometimes skew the average prices?
06:41 - Yeah, it can do.
06:43 I mean, the figures are mixed adjusted by the ONS.
06:48 So they try to take account of the different,
06:50 the different types of property that are selling.
06:55 And although transactions have dipped,
06:58 as you've said,
07:00 they've only dipped by around about 10%.
07:02 They may have some further to fall over the course of the year
07:05 but they haven't reduced significantly.
07:08 No, this isn't a 2008, '09 crash, for example.
07:13 But yeah, what you find happening,
07:16 if you look at the kind of the history of UK house prices,
07:19 where they have corrected much more significantly
07:23 has been in times where you've had distress sales.
07:25 So, you know, you look at either '08, '09,
07:28 before that you look at the market crash
07:31 at the end of the 1980s, early 1990s.
07:33 So, you know, unemployment starts rising
07:38 and people are less able to afford their mortgages.
07:44 Therefore, the stress properties come onto the market
07:47 or lending conditions really tighten.
07:50 And that means that again,
07:52 people either can't access the market
07:54 or they can't remortgage.
07:56 And again, you can get distress sales
07:58 coming onto the market.
07:59 And that kind of, you know,
08:02 higher volume of distress sales
08:05 normally has downward pressure on prices.
08:09 And this occasion, during this particular market correction,
08:14 unemployment was stayed low, you know,
08:16 it stayed down around about four to 5%.
08:19 And lending, although it has reduced,
08:21 it's still a functioning market.
08:23 It's much more of a functioning market
08:24 than it was in 2008 or 2009.
08:28 And people have been able to adjust their borrowing terms.
08:32 But yeah, I mean, less buyers normally means
08:38 that there's less demand kind of fueling the market.
08:43 And that means that prices have stabilized,
08:46 at least for the time being.
08:47 And if that demand continues to weaken,
08:49 then yeah, prices will reduce.
08:51 - I suppose that mix adjustment,
08:54 is that what you called it, that the ONS does?
08:57 I always wondered as well,
08:58 at the other end of the spectrum,
09:00 people who are more comfortably off,
09:03 who can afford to wait out any kind of downturn,
09:08 people who are mortgage free,
09:10 or possibly own more than one home,
09:12 there, if they have a choice not to sell
09:16 when the market is quieter, they do it.
09:18 But is that also built into the average pricing?
09:21 - Yeah, I mean, it's, you know,
09:24 nearly 40% of purchasers are cash buyers in Scotland,
09:29 as well as the wider UK.
09:32 And that's why you've always got to be a little bit cautious
09:35 of some of the house pricing indices
09:40 that come out from the likes of the Nationwide
09:42 and the Halifax,
09:42 because these really are mortgage loan offer indices,
09:47 and they don't take account of cash buyers,
09:50 because obviously, you know, the Halifax
09:53 and the Nationwide, you know,
09:56 their house price indices are based on mortgages
09:59 that they're offering.
10:01 So the cash buyer is important.
10:04 And yeah, I mean, you could say
10:07 that as perhaps an incentive for, you know,
10:11 people who are more comfortable
10:12 to just try and ride out the downturn,
10:15 but this can also be a good time to buy,
10:18 because, you know, with prices stabilising
10:21 or even reducing, it's a swing, it swings roundabout.
10:25 So, you know, the gain or the loss
10:28 that you may have on selling a property,
10:30 you could make up on buying that property.
10:34 So, you know, you still have a relatively high proportion
10:39 of cash buyers in the market.
10:42 So it doesn't seem to suggest
10:44 that people are just kind of sitting and waiting just now.
10:47 - Are there any other things that the layman
10:49 should be looking out for when interpreting
10:52 this property data?
10:53 But we seem to have different figures coming out every week,
10:58 as you say, from mortgage providers, from the ONS.
11:03 So how does the layman interpret it?
11:07 - Yeah, I mean, it's not easy,
11:09 unless you, you know, can really understand the field,
11:14 because there are so many indices.
11:18 I tend to trust the official ones,
11:21 so they're coming out from Registers of Scotland
11:23 or Office for National Statistics,
11:25 because they look at all sales data
11:28 and not just a kind of a sample of data.
11:31 The downside of those indices
11:36 is that they typically run, you know,
11:38 two to three months behind actual market change,
11:43 because, you know, it can take two to three months
11:45 for a massive sale to register.
11:49 Halifax, Nationwide, and these sets of indices,
11:54 they're useful in their way,
11:56 but they're only really dealing with the mortgage offers
12:00 that those banks are providing.
12:03 And then you've got other indices coming out
12:05 from the likes of, you know, Zoopla,
12:07 which tend to be asking prices rather than selling prices.
12:10 So, you know, each of them have got their pros and cons.
12:13 The Nationwide and the Halifax tends to be
12:15 that bit more up to date,
12:17 because it's looking at what's happening,
12:19 you know, a month previously.
12:21 But they only look at a sample, really,
12:27 of the sales that have occurred in the market
12:32 over that period of time.
12:36 I think treat them all as indicative.
12:38 I think that's important.
12:41 - Yeah.
12:42 Don't solely base your decision
12:45 whether to enter or exit a market
12:47 just on the house price indices.
12:49 But, you know, speak to a good agent.
12:52 I would say that, wouldn't I?
12:54 And, you know, look for good market commentaries,
12:59 just to kind of get a balanced perspective.
13:01 - Yeah, and I suppose any good agent
13:04 will be able to tell you about recent sales
13:08 in your area of similar properties,
13:10 and that's where you're going to get
13:11 the real sort of up-to-date information from.
13:15 - Yeah, yeah.
13:16 And, you know, that's what companies like ours provide.
13:20 But we also try to provide,
13:23 as do many of our competitors,
13:25 you know, good market summaries,
13:26 just distilling all of the, you know,
13:29 various strands of data that we have
13:31 from, you know, all of the indices
13:34 and that's coming from, you know,
13:35 other market providers as well.
13:37 And we're trying to distill that
13:38 and paint a picture of what the market
13:41 looks like just now and where it might be going.
13:44 So, you know, if you go into, you know,
13:47 any of the kind of the websites of our sales
13:51 and other agents, you'll get our latest commentaries.
13:55 - And predictions.
13:56 And do the predictions vary much
13:59 between you and your competitors?
14:02 - Yes, they can do, yeah.
14:05 We, you know, our expectation was at the start of the year
14:10 that prices would reduce, but in a pretty modest way.
14:15 Where, and the main correction,
14:20 the main market correction would be in transaction activity.
14:22 We thought there would be a much more significant slowdown
14:26 within transactions rather than in prices.
14:29 I would say that the bulk of market commentators
14:33 made similar predictions, but there were those,
14:36 you know, the kind of the outliers there
14:38 that said, thought that, you know,
14:39 prices would reduce much more significantly.
14:41 So, you know, double digit reductions
14:44 in average prices were predicted by some,
14:46 but that's not come to pass, at least not yet.
14:49 And, you know, I think we don't always get it right,
14:54 but we try to, when we don't get it right,
14:56 we try to understand why we haven't got it right
14:58 and, you know, make our forecast
15:00 that bit more reliable next time.
15:02 - And your forecast for the next few months,
15:05 the next couple of years, what's that looking like?
15:09 - Yeah, I mean, we said at the start of the year,
15:10 we thought there would be an average price fall
15:12 of around about 5%.
15:14 As I said earlier, you know,
15:15 prices have leveled off in 2023 to date.
15:20 We think there'll still likely be a reduction
15:22 due to activity in the, you know,
15:27 late autumn and into the winter period.
15:29 So we think a reduction in house prices over 2023
15:33 as a whole of around about 1% to 3%
15:36 is probably the most likely outcome just now.
15:39 And we think that price,
15:40 there may be further price falls in 2024,
15:44 again, modest, perhaps in the region of 2% to 3%.
15:49 Given the continuing difficulties within the market,
15:53 particularly interest rates now look like
15:56 they're going to stay at relatively high levels,
15:59 you know, 5% plus until at least the end of 2024,
16:04 maybe even into early 2025
16:06 until the Bank of England feels confident
16:07 that inflation has been sweated out of the system.
16:11 So that will obviously impact on demand
16:16 and what people can afford to pay.
16:20 And therefore that will likely translate
16:22 into a further house price fall.
16:25 But as the economy gets back onto its feet,
16:29 and again, always a big caveat here,
16:32 assuming other things equal,
16:34 then we think we'll, you know,
16:35 the kind of the average price rises
16:38 that we've seen over the last 20 years,
16:39 which is about an average annual increase
16:41 of around about 4%,
16:42 we'll get something back to that trend,
16:45 assuming that the economy does recover
16:47 by the time we get to 25, 26 and beyond.
16:51 - We'll look out for that.
16:52 Thanks very much, John, for your time today.
16:54 Great to speak to you.
16:56 And we'll maybe have you back on next year
16:59 to see how accurate you were.
17:02 - Yeah, pleasure, Kirsty.
17:03 Happy to do that.
17:04 - These days, as we've just heard,
17:06 it's not so assured that you can sit on your hands
17:09 and just let your house make money as the market rises.
17:13 But many of us do want to invest in our bricks and mortar,
17:17 not just for our own comfort and enjoyment,
17:19 but to provide a return when it comes time to sell,
17:22 or even to up the equity and improve the loan to value
17:26 for remortgaging purposes.
17:28 That's true of both homeowners and landlords.
17:30 So to discuss the best ways of adding value,
17:33 I'm happy to welcome Zaina Webster,
17:35 Director of Property Sales at Watermans, based in Edinburgh,
17:39 and for some East-West balance, Catherine Bruce,
17:42 Sales and Letting Director of DJ Alexander,
17:45 based in Glasgow.
17:45 Hello to you both.
17:47 - Hello.
17:48 - Hi.
17:49 - Zaina, I'll come to you first.
17:52 When it comes time to sell,
17:54 do you find it easy to advise people on what to do
17:58 to make their homes more marketable?
18:00 I'm thinking about tidying up and decluttering.
18:03 Is it sometimes an embarrassing conversation?
18:05 - Oh, it can be awkward at times,
18:08 but I think the reason they have us out there
18:10 is because they're looking for this advice.
18:12 They're looking for this information.
18:14 And I think you can go through this
18:16 as long as you're sensitive to the scenario.
18:18 So we are finding more and more often
18:21 that I'm going out to homes
18:23 and people aren't necessarily ready to go on the market.
18:28 And maybe they're reaching out to us
18:31 because, oh, just off the random chance
18:33 that they've seen their dream home come on the market.
18:35 And now they're kind of thinking,
18:37 I should have been planning for this
18:39 the last two or three months ago.
18:41 It's when I get out there,
18:42 I went to one just recently and I said,
18:44 "Listen, I'm gonna put my pen and paper away
18:46 and we're not gonna talk value just now.
18:48 We need to talk snagging issues.
18:50 We need to talk works that are needed done."
18:53 And buyers are wanting something,
18:54 what we're kind of calling an oven ready home.
18:57 They want a home that they can just move straight into.
19:00 And most of that,
19:01 some people do still wanna put their stamp on it,
19:03 but the realization is cost of works
19:06 are more expensive than they've ever been.
19:09 I'm going through my own refurb at the moment
19:11 and it's tough.
19:12 It's really, really tough.
19:13 - In terms of sort of the people who are planning
19:15 a little bit more long-term,
19:18 are there kind of surefire returns on investment
19:22 when it comes to projects?
19:24 Is it all about increasing floor space
19:27 or redesigning a home?
19:29 - You know what I found really interesting is
19:34 I've been saying to a lot of clients,
19:36 create something that's visually compelling.
19:38 I had one client recently just along a relief
19:40 and they bought the property
19:43 when I was at a previous agency
19:44 just to keep it as a buy to let investment
19:46 and same floor space.
19:48 They did take down the wall
19:49 in between the kitchen and living room
19:51 'cause it was a teeny tiny little galley style kitchen.
19:53 It felt very claustrophobic and they opened the space up.
19:56 But what they did is they created,
19:57 they were very specific with how they created their zones.
20:00 They looked at this open plan space.
20:02 You have your cooking zone
20:03 or you're preparing your food zone,
20:06 then you have your eating zone
20:07 and then you have your living zone.
20:09 And they're so purposeful,
20:10 but there was something so compelling
20:11 with the architecture and the design
20:13 and how they created this space.
20:14 And they maximized worktop space
20:17 and everybody fell in love with the house.
20:19 And that one down in Leith,
20:21 we ended up with 23 offers
20:23 for a first-time buyer style property.
20:25 And it was fantastic.
20:27 But what I found most interesting about that
20:29 is it wasn't just first-time buyers
20:31 and looking at coming in and competing it.
20:33 There's a lot of investors as well.
20:34 And I think they were coming into it to say,
20:36 I can pick this up.
20:38 It's a ready-made, I don't need to do a thing to it.
20:41 - Talking of investment, actually,
20:42 let me bring in Catherine.
20:44 Catherine, you must advise landlords.
20:47 And is it a very different thing on,
20:49 because you're improving a property,
20:51 presumably to boost the rent.
20:54 And so is that a very different type of advice?
20:58 I noticed you work in sales and lettings.
21:00 - There's a lot of similarities
21:02 to how the advice we give to our landlord clients,
21:05 but we're also important to us
21:07 that we're not just protecting their rental income,
21:11 we're also looking at what their capital appreciation
21:13 could be in the long-term as well.
21:16 We could be looking at suggesting everything
21:17 from a basic repainting,
21:20 to introducing energy-efficient features,
21:23 to carrying out major works, complete refurb,
21:26 and converting one bedroom to two bedrooms.
21:28 As I'm sure you know, in the Glasgow area,
21:30 there's a lot of traditional tenements,
21:32 which had been the larger one bedrooms.
21:35 And if we do those conversions right,
21:37 it can be a fantastic enhancement to the actual property,
21:42 achieving the maximum rent,
21:44 as well as potential sale price at the end of the day.
21:47 But done wrong, it can have a detrimental effect.
21:51 - And do you find that tenants' expectations
21:53 have changed over the years?
21:56 - Over the last few years,
21:56 there's been quite significant changes
21:59 in the expected standards of a property.
22:02 I'm old enough to remember how to wash dishes
22:04 without a dishwasher,
22:05 and that's now becoming more of an essential requirement
22:09 of a property for tenants.
22:12 But there's been a couple of things that have happened,
22:14 especially over the last few years,
22:15 that have had a larger impact on what our tenants expect.
22:19 And one in the first one is the change of the work dynamics,
22:22 the flexible working, the remote working.
22:25 As a result of that, we've got more demand
22:28 for flexible, multifunctional living spaces.
22:32 And it does echo what Zainab was talking about there,
22:35 about zoning.
22:36 So when we are looking at things for a rental market,
22:41 clients are looking now for an area they can work from
22:43 that they're not having to set up on the kitchen table
22:46 or their son's bedroom
22:48 and then fold it back down again.
22:50 So they are actually looking for a lot more
22:53 of that zoned area that they can work on.
22:56 But another area I believe is important now,
22:59 but I think is going to get even more important
23:01 in the years to come,
23:02 is the importance of the energy efficiency
23:04 and environmental impact that a property has.
23:08 So we're looking at our landlords
23:10 engaging more in having energy efficient properties,
23:13 LED lighting, improved insulation,
23:15 modern windows, appliances.
23:18 These are all things that are going to have
23:19 a huge longer term impact on the marketability
23:23 and appeal of a property.
23:24 Tenants are going to be happy to pay that a little bit more
23:27 if they can reduce their actual utility costs,
23:30 and as well as the actual environmental impact.
23:33 - And that can really boost your EPC,
23:35 which people are looking at more and more
23:37 when they're looking to either buy or rent.
23:41 Okay, now I once read that homeowners or property owners
23:46 should be spending about 1% of the home's value
23:50 on maintenance and upgrades every year,
23:53 which sort of horrified me
23:54 because I don't think I've spent anywhere near that amount.
23:57 But if I could give you each metaphorically,
24:01 a budget of 1% of the value of an average property,
24:04 so let's say that would be about 2000 pounds,
24:09 how would you spend it?
24:11 Zaina, I'll come to you first.
24:13 - Perfect.
24:14 I would paint, paint, paint, paint, paint, paint.
24:19 Depending on if you're doing it yourself,
24:20 because obviously if you're doing it yourself,
24:22 your budget can stretch a lot further.
24:24 I would be also looking at your windows.
24:25 Do they need replaced?
24:26 Do they need the seals redone?
24:29 And I would look at how to create the space
24:31 or the illusion of space.
24:32 So you're wanting to look at,
24:33 sometimes that comes into furnishings,
24:35 that comes into storage.
24:37 You're really wanting to kind of just declutter.
24:39 So a lot of that, if I've got two grand to spend,
24:42 I'm looking at internals that way,
24:43 paint, windows, and I'm looking at furnishings or storage,
24:48 but I'm also looking at outdoor.
24:50 What do I have outdoor?
24:50 Do I need to power wash?
24:52 Am I looking at pops of color?
24:53 Am I really coming in to just maximize that space?
24:56 And that's what I'm doing.
24:58 - And Catherine, how about you?
24:59 2000 pounds, there you are.
25:01 I've written you a check.
25:02 How are you going to spend it
25:03 on the average rental property?
25:05 - I think I'd start with actually ensuring
25:07 the property's deep cleaned.
25:09 And that has a massive impact on potential viewers.
25:13 For me, it would be make sure the seals are in the bath,
25:17 the shower, the sinks are all done
25:19 because they end up costly at the other end
25:22 if you end up with water ingress, painting.
25:25 - Prices!
25:27 - Same here, painting, painting, painting,
25:31 and please neutral colors, but no magnolia.
25:35 - Oh my gosh, that is me too.
25:37 That is me.
25:38 If I never see another magnolia covered wall
25:40 in my whole life, it's too soon.
25:42 - Absolutely.
25:43 - I'm slightly trying to hide the wall behind me
25:48 because you will notice that it might well be magnolia,
25:52 but I will paint over.
25:54 And sort of at the other end of the scale,
25:56 are there some improvements
26:00 that are sort of anything but?
26:02 Are there people who will say,
26:04 have you out to look at their improvements
26:07 and your heart just sinks
26:08 because you think this is the worst possible thing
26:10 and you've wasted your money?
26:13 Catherine, how about you answer that one first?
26:16 - Oh yes, unfortunately yes.
26:18 Where people painted and they have painted it
26:23 or decorated it in a color that is just absolutely horrific
26:26 or they've gone and furnished it
26:28 in such a way that sort of takes you back in time,
26:32 back to your granny, visit your granny
26:34 with the obligatory doily over the back of the sofa.
26:38 All those sort of things.
26:40 I've seen somebody who's refurbished the whole house
26:43 but left the avocado bathroom suite 'cause they liked it.
26:47 So it's making sure that you're balancing things correctly
26:52 across the board so that you're walking in
26:54 on a clean canvas and not just taking one room
26:57 or another room, I think it's just all or nothing.
27:01 - Yeah, and Zaina, have you seen expensive mistakes
27:04 in your house experience?
27:06 - We've dealt with a sale last year
27:08 and it was a client in East Lothian
27:09 and it was a great, cool, little kind of quirky
27:11 three bedroom bungalow.
27:13 The third bedroom was a single,
27:14 but it was option of professionals, couples, family home
27:18 and a gentleman bought it.
27:20 It was a single guy and he knocked down all the walls
27:23 and made it like just a studio apartment
27:26 but kept the single bedroom
27:28 for when he had guests and visitors.
27:30 And I remember walking, it was beautifully done,
27:33 very amazingly handcrafted, absolutely stunning.
27:36 But it was open plan lounge dining kitchen
27:38 and then had this bedroom studio in the back area.
27:41 And I remember the surveyor and I walked in
27:44 and I was already prepared for it.
27:45 And I just said, I just don't know
27:46 what we're getting ourselves into
27:47 because square footage were identical to everybody else.
27:49 We just don't have any walls.
27:51 And he ended up selling for 11% under his home report value
27:56 and his neighbor two doors down,
27:58 identical wasn't quite as quirky and cool
28:00 and trendy as ours, but sold at 19% over home report value.
28:04 Same floor space, same everything, they just had walls.
28:08 - Yeah.
28:10 - And I always tell clients, if you're doing a refurb,
28:12 of course do it to your taste because you're living there
28:14 and you want to enjoy it.
28:16 He did it, I mean, he did it.
28:17 He really enjoyed it, but it did cost him,
28:20 anywhere but probably 21% a difference in price.
28:24 - Yeah, I think that sometimes it's not even losing a wall
28:28 and losing a bedroom.
28:30 I think sometimes people,
28:32 perhaps if they're a single person or a couple
28:34 and they live in a three or four bedroom house
28:36 and they've maybe got a gym in one room
28:39 and a cinema in the other room.
28:41 I think it can sometimes be really difficult
28:43 for people coming in, a young family coming in
28:46 to realize that these are bedrooms.
28:48 And that while somebody would use this space as a studio
28:53 or it's sometimes best to just put a bed in it
28:55 to remind viewers.
28:57 - There's nothing worse than when you actually walk in
29:00 and there's one room randomly empty.
29:03 And it's like, well, what's this for?
29:05 'Cause you've not put a purpose to it.
29:07 I've actually seen myself because people go,
29:09 "Oh, there's no way a bed will fit in here."
29:11 I've actually seen myself actually either lying down
29:13 on the floor or having a couple lie down
29:16 to prove that a double bed would fit.
29:18 - Yeah, it's best to show what the room is actually for.
29:23 And in terms of, I suppose, the big luxurious additions,
29:28 Zaina, people building a swimming pool complex
29:32 or a gym and a working office outside.
29:37 Are those the kinds of things that will gain or lose value?
29:42 - Swimming pool, I just don't think
29:44 we've got the weather here as much as I think
29:46 we would all love an indoor swimming pool that's heated
29:48 and it would be amazing.
29:50 I just don't think that we're probably all open to it
29:53 and ready for the hard work that is required
29:56 with the maintenance and upkeep of an indoor swimming pool.
29:59 So I think that that would be a no-go.
30:01 I would always recommend people,
30:02 if you're looking at investing,
30:04 yeah, let's do something else.
30:05 The outdoor areas, absolutely.
30:07 I think outdoor space is really where people,
30:09 it's just an extension of your indoor.
30:11 So people really want to see that.
30:13 What I've been noticing more is outdoor kitchens.
30:15 So coming in there and really utilizing,
30:17 going into the pods, whether it's a home office, a gym,
30:20 I've seen a lot of garages that people are converting
30:23 into half being a gym,
30:24 which half and then the other half being an office,
30:27 you can do something else.
30:28 You can turn that into a granny annex.
30:29 You've got tons of options of what you can do with it.
30:32 - And Catherine, with the rental property,
30:35 are outside spaces becoming important
30:39 if you're renting a house with a garden?
30:42 - Yeah, absolutely.
30:43 I think, especially with all the changes
30:45 over the last few years,
30:47 the appreciation of an outdoor space is so important.
30:50 But even for people that live in the city center,
30:52 the West End and things like that,
30:53 access to outdoor spaces is becoming a real requirement
30:58 for a lot of our tenants.
31:00 I think the last few years have taught us
31:02 that we want to appreciate being outdoors a lot more.
31:05 Access to outdoor spaces is vital.
31:08 - And have you come across flats?
31:09 Have you been out to view properties to rent
31:14 and just thought, "Oh my goodness, what have you done here?"
31:19 - Yeah, there's one that springs to mind
31:23 where they'd actually gone into the attic
31:27 and the stairs would not pass
31:30 any planning regulations at all.
31:32 There's those ones.
31:34 There's the ones that maybe are quite one down,
31:38 wouldn't meet our repairing standards.
31:41 And in those cases, we work with our clients
31:43 to bring them up to standard.
31:45 But sometimes, for people who've been living there,
31:47 they can't see past that.
31:49 They don't understand.
31:50 But we do have to have basic requirements
31:53 of repairing standards for our tenants.
31:56 But yeah, there has been some
31:57 that you would just have to walk away from.
32:00 They're not really suitable for the rental market.
32:03 - So Catherine, you were just talking about
32:05 doing the investment in things
32:07 that can decrease value or increase value.
32:10 What I find interesting is when I meet prospective investors,
32:13 I always find it interesting
32:14 that they are almost looking at the property
32:17 as a purchase for themselves
32:18 and not taking their emotions out of it.
32:21 And I think really sometimes that can actually
32:23 really affect the value or what they could gain
32:27 from their investment.
32:28 I'm dealing with one at the moment
32:31 and it has potential to convert into a two bed.
32:33 And they keep saying, "Oh, this is such a small room
32:35 to use as an open plan lounge dining kitchen."
32:37 And I say, "For you, yes, for you it might,
32:40 but for a tenant, this is city center.
32:42 It's just off Leith Walk.
32:43 You're 10 steps away from a tram stop.
32:47 This is singles, professionals, couples.
32:49 You can turn it into a two bedroom.
32:51 And even if it's a single person here,
32:52 they then have a home office, but you have an area."
32:55 A lot of tenants don't necessarily want a dining table.
32:57 They'd be cool for a trendy kitchen island and stuff.
33:01 And I really sometimes think that they miss the mark
33:03 by not asking professionals like yourselves
33:05 to say, "What do tenants look for?"
33:07 - Absolutely.
33:08 And I think that's sometimes the hardest things
33:10 when you have those conversations
33:11 and people are putting themselves in the position
33:13 of being a tenant, but taking their own personal wants,
33:17 their personal desires and putting that on the property.
33:20 So you're absolutely right.
33:22 And I think that's where sometimes we can come in.
33:24 I've got my own personal sort of things I like
33:27 and there's things I don't like.
33:29 But when we're dealing with tenants day in and day out,
33:31 we know what they're asking for.
33:32 We know what they want.
33:34 We know where the trends in the market are
33:36 and the lifestyle that the tenants have.
33:40 So that is so important.
33:41 - I'm just going to change the subject slightly
33:44 for our last question.
33:46 And it is because I know both of you are obsessed with dogs.
33:51 (laughing)
33:52 And I was thinking about, in terms of adding value,
33:55 one of the things, we've talked about cleaning
33:58 and decluttering, but a lot of the advice that is given
34:01 is remove all evidence of pets, cats, dogs,
34:06 because if you get a viewer who doesn't like animals,
34:09 then that might put them off.
34:11 Zaina, do you give that advice?
34:14 - I do, I do.
34:15 Unfortunately, as much as I love dogs,
34:17 I love them at my appointments, absolutely.
34:19 But I do say, clear them out.
34:21 There's no guarantees in terms of the dog's temperament.
34:23 Will they be territorial over their home?
34:26 Will they be barky?
34:27 And again, that can really put buyers off.
34:30 As well, some people may be allergic.
34:31 So I do always recommend, clear the dogs,
34:34 clear the pets out.
34:35 When we sometimes talk about value as well,
34:37 I am going through my own refurb, and being a dog lover,
34:41 I was genuinely trying to convince my husband
34:43 to let me have a dog washing station
34:45 in our rear kind of corridor.
34:47 And he kept saying, "This will not work,
34:49 "this will not work."
34:50 And when I was trying to get contractors in,
34:52 they all looked at me like I was completely insane.
34:53 So we ended up just going for more cupboard storage,
34:56 but I really had it all drawn up,
34:57 and it was going to be a complete side door
34:59 dog washing station there.
35:00 - That is absolutely something
35:02 that would make me buy a house.
35:04 I have been in houses where they have,
35:07 that, you know, especially out in the country,
35:09 I live in Argyle, and you know, it's muddy,
35:11 it rains all the time.
35:13 And there is a house just down the road that has,
35:16 I mean, it is just like a top class salon.
35:18 They've got, you know, a low doggy bath,
35:22 and a shower, and they've got a hair dryer as well.
35:26 - Yeah.
35:28 That would definitely add value in my eyes,
35:30 but I do understand that a lot of people
35:32 would look at that and think,
35:33 "Well, that's no use to me."
35:35 Catherine, I was going to ask you on the subject of dogs.
35:38 There is sort of discussions and legislation coming in
35:42 about tenants with dogs.
35:45 What do you advise your clients about accepting pets?
35:49 - At the moment, I think a lot of clients
35:53 are apprehensive about accepting pets,
35:56 and that's due to potential damage,
35:58 and things like that.
35:59 Obviously, the current proposals would be that,
36:03 you know, landlords should accept pets,
36:07 unless there's a specific reason.
36:09 There can be specific reasons,
36:10 and there is maybe factor requirements
36:13 that they're not allowed dogs in the area.
36:16 As a dog owner myself, I do think that, you know,
36:20 the dogs and cats do make for a family and for a home.
36:25 So I do think that once the changes are implemented,
36:29 if they are implemented,
36:30 we may actually see that the concerns
36:33 that the landlords have
36:35 are not going to actually be realized,
36:36 and you're going to find that tenants will stay a lot longer
36:39 because they make their home,
36:41 it's now their house, now their home.
36:43 And also, you know, there is that we can ask
36:46 for higher deposits to protect it, you know.
36:50 But what I have found is where properties
36:52 have been rented out with dogs or cats,
36:54 you tend to find the damages as minimal,
36:57 and as long as they're professionally cleaned afterwards.
37:00 The animal I find that causes the most damage is rabbits.
37:03 You know, the rabbits are absolutely horrendous.
37:06 They eat all the skirting, have chewed through cables,
37:09 but that's only my personal experience of rabbits.
37:12 - I've been to evaluation and they had a rabbit room,
37:14 and she said, "Do we need to replace the carpet?"
37:16 I said, "100%," because I think if somebody comes in,
37:19 they'll think, "Do you have mice?"
37:20 And it was a question, "Would you have mice?
37:22 "Is this rats?
37:23 "What are pooping on the edges?"
37:25 - House rabbits, I don't think I've ever met a house rabbit,
37:28 but yes, I think I can imagine.
37:31 With that piece of advice,
37:33 thank you so much to you both.
37:35 - Thank you.
37:36 - Thank you.
37:37 - For giving us the list of potential pitfalls.
37:39 Thanks very much to both of you for taking part,
37:41 and thanks to Dr. John Boyle.
37:44 You've been listening to the "Scotsman Property Podcast"
37:47 in partnership with DJ Alexander.
37:49 And if you've enjoyed this, tune in next month,
37:52 where we'll be taking a deeper look
37:54 at the costs and benefits of super energy efficient homes.
37:59 Thanks.
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