Buying a second home in Scotland can be an exciting and rewarding investment, whether you’re looking for a holiday retreat, a rental property, or a long-term asset. However, it’s essential to understand the financial implications, tax considerations, and potential challenges before making your decision. Here’s everything you need to know about purchasing a second home in Scotland in 2025.
Why Buy a Second Home?
Pros:
- Investment Potential: Property values in Scotland have historically shown steady growth, making a second home a great long-term asset.
- Rental Income: A second home can generate income through long-term letting or holiday rentals, particularly in tourist hotspots like Edinburgh, the Highlands, and the Scottish Isles.
- Lifestyle Benefits: Owning a holiday home provides a personal retreat, reducing accommodation costs when traveling.
- Family Planning: A second home can serve as a future residence for family members or as a retirement property.
Cons:
- Higher Purchase Costs: Additional dwelling supplement (ADS) tax applies to second homes in Scotland, and is added to any Land and Buildings Transaction Tax (LBTT) which may be due.
- Ongoing Expenses: Mortgage payments, maintenance, insurance, and utility costs must be factored into your budget.
- Rental Management: If renting out the property, you’ll need to handle tenant management, maintenance, and potential void periods.
- Market Risks: Property values can fluctuate, and regulatory changes may impact rental income or tax obligations.
What to consider?
Mortgage Options for a Second Home
If you require a mortgage, lenders typically have stricter criteria for second homes. You may need:
- A higher deposit (often 25% or more).
- Proof of affordability, considering existing financial commitments.
- A specialist buy-to-let or holiday let mortgage if renting out the property.
Location Matters
Consider your long-term goals when choosing a location. Popular areas include:
- Edinburgh & Glasgow: Strong rental demand and capital appreciation.
- The Highlands & Islands: Ideal for holiday lets and scenic retreats.
- Coastal Towns: Places like St Andrews and North Berwick offer great lifestyle appeal.
Legal and Tax Considerations
- Second homes may be subject to Capital Gains Tax (CGT) if sold at a profit.
- Rental income is taxable, and you must declare it to HMRC.
- If purchasing a holiday let, it must meet specific criteria to qualify for business rates rather than council tax.
Property Management & Maintenance
If you don’t plan to live in the property full-time, consider:
- Hiring a property management company for rentals.
- Regular maintenance to prevent costly repairs.
- Security measures to protect against vacant property risks.
How Cox & Co Can Help
Buying a second home can be complex, but with expert guidance from Cox & Co, the process becomes seamless. Our team of property specialists can assist with:
- Finding the right property in the best location.
- Navigating mortgage options and tax implications.
- Managing rentals and maximising investment potential.
Final Thoughts
A second home in Scotland can be a fantastic investment and lifestyle choice when approached with careful planning. Understanding the costs, mortgage requirements, and legal considerations will ensure you make a well-informed decision.
If you’re considering purchasing a second home in 2025, get in touch with Cox & Co today for expert guidance tailored to your needs.
Get in touch
Here at Cox and Co, our property experts can answer any queries you may have on investing in property in Scotland and will happily walk you through each step of the way tailored exactly to your investment needs. Get in touch with us here. We would love to hear from you!
