Investing in Scottish Residential Property

Meet our experts in investment property (contact details below)

An overview of the Scottish Conveyancing System

Buying or selling a property can be both very exciting and stressful. At McVey and Murricane, we understand that this can be the case and our dedicated team are here to guide you through the conveyancing progress and to ease any concerns you may have.

Purchasing a property is one of the most important decisions someone is likely to make. Not only does the initial outlay of money cause concern but there are the future implications of whether the property is likely to be a worthwhile investment in years to come.  

The conveyancing process has several steps, but before going through the steps below, it is worth noting that in Scotland, the sale and purchase of property is achieved through a process called “missives”. Missives are a series of formal letters which are exchanged between the seller’s solicitor and the purchaser’s solicitor until agreement has been reached on both sides. For further information on missives, please see our helpful guide.

Steps to property ownership

Here are ten steps to property ownership in Scotland which we have outlined below. It is important to note that the list below is merely a guide and it is not an exhaustive list of the steps required to buy or sell property. Our website sets out comprehensive guides for each step as well as an explanation of the different offer terminology that can be used.

Submitting an offer

The offer must be in writing and will consist of:

1. The price of the property.
2. What items are to be included with the property i.e., curtains, washing machine etc.
3. Preferred date of entry; and
4. Any special conditions such as subject to mortgage financing or sale.

Offer accepted

Once the offer has been verbally accepted, it will be followed by a written acceptance by the seller’s solicitor called a qualified acceptance. The qualified acceptance will contain specific conditions about the property - for example, if your offer states that the price will include the washing machine the seller’s solicitor could respond in the qualified acceptance that the washing machine will not be included.

The offer and the qualified acceptance form part of the series of formal letters which make up the missives. These are essentially formal letters which pass between the seller’s solicitor and purchaser’s solicitor until all points are agreed.

Important Point: Until missives have been concluded there is no legally binding contract in place and either party can walk away from the sale/purchase.

Understanding Tenancies and your obligations

It is critical to understand the extent of a landlord’s responsibilities in investment properties as these will have an impact on the value (not necessarily just the financial value) of the investment to you.

There are strict obligations which apply to landlords letting private properties. These range from requirements prior to letting a property out to carry out safety checks on appliances within the property and to undertake any work which may be required to any such appliances to ensure that they are in a safe condition through to providing information on the tenancy agreement and any deposit arrangements including setting up, and providing details of, the authorised deposit holder.

In addition, as a private landlord, you will require to ensure that you are registered with the relevant local authority.

If you are already familiar with the English forms of residential tenancy such as assured shorthold tenancies, please be aware that the system in Scotland can be very different from the system south of the border.

In Scotland, the standard form of residential tenancy agreement since 1^st December 2017 has been the Scottish private residential tenancy and it is important to note that a private residential tenancy has no set termination date.

Rent can only be increased once every 12 months and there is a mechanism in the private residential tenancy for referring any proposed increase to a rent officer.

If, however, you are purchasing an investment property where there is a short-assured tenancy agreement (SAT) which was in place on 1^st December 2017 when the new private residential tenancy came into effect the SAT will remain in place until either party brings it to an end.

There are, in addition, strict rules regarding the payment of deposits and a restricted number of providers who can hold deposits.

McVey & Murricane’s market leading team have unrivalled experience in advising clients on these matters and would be happy to discuss your individual requirements with you.

Land and Building Transaction Tax (LBTT) and the Additional Dwelling Supplement (ADS)

LBTT is a property tax that is applied to residential and commercial land and buildings transactions. LBTT is a “stepped” tax which means that there are certain rates which are applied depending on the purchase price of the property.

LBTT is the Scottish equivalent of Stamp Duty Land Tax (SDLT) in England and Northern Ireland however, there are a few differences between the two tax systems.

For this document, we will be focusing on residential property rates, but you can find the commercial property rates here. The residential rated can be found here.

Additional Dwelling Supplement (ADS)

ADS is a supplementary tax which, since its introduction on 1st April 2016, is payable on the purchase of a property, which will not be used as the purchaser’s main residence and where the purchase price is over £40,000.

Unlike LBTT, ADS is not a stepped tax and the current supplement payable is 4% of the purchase price. More information on ADS and its application can be found here.

Can my purchase attract both LBTT and ADS?

As part of our regulatory requirements by the Law Society of Scotland, we submit the LBTT (which includes ADS calculations) return to Revenue Scotland on your behalf and we are under a legal obligation to ensure that the return is accurate and discloses where tax is due.

That means that we must examine the circumstances of the transaction and assess whether tax is due. We are not tax advisors and cannot provide you with definitive advice on whether the tax is payable or by how much; to assist you we provide you with our best understanding of the position, but you are free to take tax advice if you wish. It is important that if you have any doubts or queries regarding payment of ADS that you contact a tax expert or an accountant for further information.

Involvement of Banks and Building Societies in the Conveyancing System

Banks and building societies have a crucially important role in the conveyancing system. Even cash buyers invariably need someone to purchase their property and, in all likelihood, that someone will be funded by a bank or building society.

When you submit an offer for a property you will probably already have "approval in principle" from a lender. This is an indication from your chosen lender that, providing they are happy with the title to the property and other matters relating to you and the property, they will be willing to lend you money to secure your purchase of the property.

Once your offer for the property has been accepted, your broker if you have one, should speak to the bank or building society as quickly as possible with a view to getting a formal offer of loan in place. We cannot advise you to commit legally to the purchase of a property if you do not have your offer of loan in place as if you were to do that, you would be committed to proceeding without having the funds in place to do so.

Once your offer of loan has been issued, we will prepare the mortgage documents for signing using our innovative MMi authority system and liaise with you and your lender to ensure that the funds which you are borrowing from them are in place in plenty of time to settle your transaction.

Limited Company Lending

McVey and Murricane are market leaders in advising Limited Companies on property transactions and they are the primary choice for many lenders when choosing a legal adviser in Scotland. Our dedicated Specialist Lending team act for lenders and Limited Companies and are uniquely placed to deal with the niche requirements of Limited Company transactions.

In most cases the lender you choose to help with your purchase will be happy to instruct McVey & Murricane to act on their behalf as well as on your behalf in relation to the purchase and this helps ensure the smooth running of what can be a complex interaction between lots of parties.

As one of Scotland’s largest property and lending law firms, you can rest assured that, with our experience of dealing with all the major and many of the specialist lenders, McVey & Murricane will ensure that your transaction runs smoothly from start to finish. 

Our experienced team advises on a broad range of residential conveyancing matters, including, buying, selling, transferring property, voluntary registrations of properties on the Land Register and complex title matters.

We act for a range of clients including international clients looking to purchase in Scotland as an investment or as a home to live in upon their relocation to the United Kingdom. Our Residential Property team works closely with our wider Commercial Property team, and we can draw on specialist expertise and provide bespoke advice for the individual needs of our clients.

Robin Craig (rcraig@mcvey-murricane.com) (07741847390)

Director of Commercial Property

As Director of Commercial Property, Robin brings with him in excess of 30 years’ high-level experience in the commercial and residential property markets having been previously a Director at another leading Glasgow property practice.

Robin advises not only on commercial and residential property matters but also, more generally, on the sale and purchase of businesses.

Working closely with Allan and Fallon, he provides unrivalled experience and expertise to McVey and Murricane’s extensive client base.

Allan Radlow (aradlow@mcvey-murricane.com) (07809506426)

Senior Principal

Allan is widely acknowledged as a one of Scotland’s leading property lawyers. Allan has over 40 years' experience of which 39 have been spent at McVey and Murricane as solicitor, partner and for over 20 years Senior Principal.

Allan is never happier than when discussing all matters property and lending with clients, lenders, and the broker community.

Fallon Sara Spencer (fspencer@mcvey-murricane.com) (07387090010)

Principal and Head of Specialist Lending

Fallon is a Principal within the firm, and she is the head of the Specialist Lending department. She is a property and finance lawyer with considerable experience in advising banks, building societies on property asset backed securities as well as developers, and investors (both domestic and foreign) in buying and selling.

Fallon has a particular interest and talent for Land Registration and technical title matters. She works closely with Registers of Scotland to continue the improvement of registration law in Scotland.