How much do you need to invest in property? | John Cox dives into the costs for first-time investors wanting to get onto the property ladder.



In this article, the Managing Director of Edinburgh property investment company Cox & Co John Cox will explain what’s needed to get started with property investment. This article is based on residential property investment if you’d like to read more on other types of property investment such as investing in commercial properties, you can read about that in ourcommercial property investment blog.

“How much money do I need to invest in property?”

This is one of the most common questions we get from our prospective property investment clients. More and more people are recognising the unique advantages of property investment, and Edinburgh and Scotland’s Central Belt, in general, is a great place to invest and earn cash through property thanks to steadily rising average property prices.

What are the costs associated with investing in property?

If you’re considering investing in a buy-to-let property in Scotland, it’s important to understand the different costs associated with the purchase. Here are some of the key costs you should be aware of:


One of the biggest upfront costs associated with buying a buy-to-let property in Scotland is the deposit. In general, you’ll need to put down a larger deposit for a buy-to-let property than you would for a standard residential property. Typically, you’ll need to put down at least 25% of the property’s value as a deposit, although some lenders such as the bank may require more. It’s always best to consult with a mortgage broker or advisor to find the best deal for you.

Mortgage fees.

In addition to the deposit, another one of the upfront costs is you’ll also need to pay mortgage fees when purchasing a buy-to-let property in Scotland. These can include arrangement fees, valuation fees, and legal fees. It’s important to budget for these fees upfront to ensure you have enough funds to cover them.

Stamp duty.

Like any property purchase in Scotland, you’ll also need to pay stamp duty when buying a buy-to-let property. In Scotland, this is known as Land and Buildings Transaction Tax (LBTT). The amount of LBTT you’ll need to pay will depend on the purchase price of the property, with higher-priced properties incurring higher rates of tax.

Solicitor fees.

You’ll also need to hire a solicitor to help you navigate the legal aspects of purchasing a buy-to-let property in Scotland. Solicitor fees can vary depending on the complexity of the transaction and the solicitor you choose to work with.

Solicitor fees associated with buying property typically range between £1000-2000. LBTT applies for properties with a purchase price of over £145,000; the fees start at 2%. ADS is an LBTT supplement on purchases of additional residential properties in Scotland (BTL properties, 2nd homes, holiday homes, etc). The ADS tax is 4 per cent of the total purchase price (of properties valued at £40,000 or more).

Surveyor fees.

Before purchasing a buy-to-let property in Scotland, it’s crucial to have a survey carried out to identify any potential issues with the property. Surveyor fees can vary depending on the type of survey you require and the size and location of the property.


Rental property owners also need to take out landlord insurance to protect their investments. This can include building insurance, contents insurance, and liability insurance. The cost of insurance will depend on the level of coverage you require and the insurance provider you choose.

Legally required certificates.

There are also legally required certificates rental property owners need to get in order to prove their property is safe for their tenants, such as a gas safety certificate. I’d recommend that you set aside a couple of hundred pounds for these.

 Furnishing and maintenance costs.

Once you’ve purchased a buy-to-let property, you’ll also need to factor in the cost of furnishing and maintaining the rental property. This can include things like furniture, appliances, and repairs and maintenance. By understanding these costs upfront, you can budget effectively and make informed decisions about your investment.

Additionally, I’d recommend having at least a couple of hundred pounds set aside in case of unforeseen maintenance issues.

Buy-to-let mortgages to get you on the property market.

When it comes to the cost of the property, most people choose to cover part of the price with a downpayment and the rest with a specialist buy-to-let mortgage to get themselves involved in the property market.

If you’re a young property investor in Scotland looking to purchase a buy-to-let property, it’s important to understand how buy-to-let mortgages work. Unlike standard residential mortgages, buy-to-let mortgages are designed specifically for landlords who plan to rent out their properties. Here’s what you need to know:

How they work

Buy-to-let mortgages work in a similar way to standard residential mortgages, but there are some key differences. With a buy-to-let mortgage, the amount you can borrow will typically be based on the rental income you expect to receive from the property, rather than your own income. With buy-to-let mortgages, loan-to-value (LTV) ratios typically hover at around 75%, meaning you need a 25% deposit for the purchase. So if you were to buy a £110,000 one-bedroom flat, you’d need a deposit of at least £27,500.

Mortgage interest rates

Mortgage interest rates for buy-to-let mortgages can vary depending on the lender and the specific mortgage product. In general, however, interest rates for buy-to-let mortgages tend to be higher than those for standard residential mortgages, reflecting the higher risk involved in renting out a property.


When applying for a buy-to-let mortgage, lenders will typically assess your affordability based on the rental income you expect to receive from the property. In general, lenders will require the rental income to be at least 125% of the mortgage payments, to ensure that you can cover the mortgage repayments even if the property is vacant for a period of time.

Types of buy-to-let mortgages

There are several different types of buy-to-let mortgages available, including fixed-rate mortgages, tracker mortgages, offset mortgages and interest-only buy-to-let mortgages. Fixed-rate mortgages offer a fixed interest rate for a set period of time, while tracker mortgages track the Bank of England base rate. Offset mortgages allow you to offset any savings you have against the mortgage balance, reducing the amount of interest you pay. Interest-only buy-to-let mortgages are a type of mortgage where the borrower only pays the interest on the mortgage, rather than paying off the mortgage balance. It’s best to speak to a mortgage broker to have a better understanding of what mortgage suits you best.

At Cox & Co, we typically recommend an interest-only mortgage rather than a repayment one in order to maximise your rental income. This way, you can make back your initial investment faster.

Repayment options

When it comes to repayment options, buy-to-let mortgages offer several choices. Some mortgages require you to make interest-only payments, meaning you only pay the interest on the mortgage balance each month. This can keep your monthly payments low but means that you won’t be paying off the mortgage balance. Other mortgages require you to make capital and interest payments, meaning you’ll be paying off the mortgage balance each month.

Buy-to-let mortgages can be an excellent way for young property investors in Scotland to finance their property investments. By understanding how these mortgages work, the interest rates and affordability, and the different types of mortgages available, you can make informed decisions about your investment and find the right mortgage product to suit your needs.

So John, how much do I need?

Well, the bottom line is that there’s no one-size fits all answer, but if you want to get started in property investment in Scotland right now, you’ll likely need a minimum of about £35,000 to get started.

Of course, this number will change depending on the house prices, the house size and the exact location of your potential investment property, so your best bet is to talk to a property investment manager to get started.

With property prices steadily increasing in Edinburgh and across central Scotland, now’s the time to get started in property investment, whether you’re looking for some extra passive income or simply investing your money in a relatively stable, physical asset.

What if I don’t have the money to invest in property right now?

Investing in property can be a costly endeavour and it’s not uncommon for young investors to find themselves lacking the capital to invest in a property on their own. In such cases, partnering with others can be a great solution. By teaming up with other like-minded individuals or groups, young investors can pool their resources, share the risk and increase their buying power.

One option is to partner with friends or family members who are also interested in property investment. This can be a great way to get started as you already have an existing relationship and can build a solid partnership based on trust and shared goals. When working with friends or family members, it’s crucial to have open communication and clear agreements in place to avoid any misunderstandings down the line.

Another option is to join a real estate investment group. These groups are made up of individuals who pool their resources together to invest in property. Members can range from novice investors to experienced property developers, and the group will typically have a designated leader who manages the investments and makes decisions on behalf of the group. Real estate investment groups can offer several benefits, including access to a wider range of properties and investment opportunities, as well as access to expert advice and guidance from experienced investors.

Partnering with others can also bring a variety of financial benefits. By pooling your resources, you can increase your buying power and invest in properties that may have been out of reach otherwise. This can also help to spread the risk and reduce the financial burden on individual investors, making it a more affordable and sustainable way to invest in property.

However, it’s important to note that partnering with others also has its potential risks. It’s crucial to have a clear agreement in place outlining the roles, responsibilities and profit-sharing arrangements for all parties involved. This can help to prevent any misunderstandings or conflicts down the line.

Partnering with others can be a great way for young investors in Scotland to overcome the challenge of limited capital and get started in the property investment market. By teaming up with like-minded individuals or joining a real estate investment group, investors can pool their resources, share the risk and increase their buying power. However, it’s important to carefully consider the potential risks and benefits before entering into any partnerships and to have clear agreements and open communication in place to ensure a successful and profitable investment venture.

Why you should consider getting a property manager on board for your first investments in property.

First-time investors in Scotland who are just starting out in the property investment market may find that managing their properties themselves can be a daunting and time-consuming task. This is where a property manager can come in handy. A property manager is a professional who can handle the day-to-day management of your rental property on your behalf, allowing you to focus on other aspects of your investment portfolio.

Here are some reasons why first-time real estate investors in Scotland should consider hiring a property manager:


Obtaining and managing a rental property can be a time-consuming task, especially if you have a full-time job or other commitments. A property manager can handle all aspects of property management, including finding and screening tenants, collecting rent, handling maintenance and repairs, and handling any tenant complaints or disputes.

Knowledge and expertise.

Property managers have extensive knowledge and expertise in the property market. They can advise you on market trends, rental rates, and local regulations, which can help you to make informed decisions about your investments.

Tenant screening.

Finding the right tenants is crucial to the success of your investment. Property managers can conduct thorough background checks on potential tenants, including credit and criminal checks, to ensure that you have reliable and trustworthy tenants.

Rent collection.

Property managers can handle the rent collection process on your behalf, which can save you time and hassle. They can also handle any late payments or delinquent tenants, which can be a difficult and stressful process for landlords.

Property maintenance and repairs.

Property managers can handle all maintenance and repairs for your rental property, ensuring that it is in good condition and that tenants are happy. This can help to prevent costly repairs down the line and ensure that your property remains attractive to tenants.

Legal compliance.

Property managers are well-versed in local regulations and can ensure that your property is compliant with all legal requirements. This can help to prevent any legal issues or disputes down the line and give you peace of mind.

Young investors in Scotland who are just starting out in the property investment market may find that hiring a property manager can be a wise investment. A property manager can handle all aspects of property management, from finding tenants to handling maintenance and repairs, which can save time, reduce stress, and ensure the success of your investment.

Need more information on how to get onto the property ladder?

Here at Cox & Co, we can assist you at any stage of your property investment journey whether you are interested in getting started with your first property or want to extend your current portfolio further. Get in touch to talk to one of our property experts, we’d love to hear from you!

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