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The Axis Smart Guide: Property Investment in Scotland

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Property Investment In Scotland by Rod Thomas FCA Why Scotland? If you live in England, you could be forgiven for thinking that Scotland is a different country and a long way away. Of course if you live in Scotland the reverse is true. When appraising property investments in Scotland, Axis investigates the long term value of the property, the local demographics and their impact on potential property prices. So what exactly is the attraction of Scotland as an investment destination for smart property investors? Let's consider the eight main reasons to invest in Scotland:

Pricing stability With some exceptions, Scotland has not suffered from huge price increases or severe price falls. For an investor valuing steady growth and stability, that's a good background for investment.

Rental Demand Scotland has a thriving rental market with a higher proportion of renters than in England. Again, for a buy to let investor, this is good news.

Rental Yields are Good We only offer rental yields with a minimum gross return of 7.5% pa and often higher; 8.5% is relatively common. This contrasts with England where only this afternoon I am weighing up whether to offer property to our investors with a yield between 4.7% and 6.5%. The high rental yields mean that you can be confident of positive cash flow and peace of mind.

Deals Actually Happen If you are investing in England, mortgage valuations continue to be a source of anxiety and deal failure with considerable risk in the transaction progressing to completion. Typically 30-40% of transactions in England currently fail. In Scotland the success rate is far higher - 90% or more which is great news for investors.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Regular Stock If you are intending to build a portfolio, Axis can offer you a regular stream of property across Scotland.

Resale Property Most of our deals in Scotland will be resale property. That means very competitive pricing and no saturation of the local market that can happen with new build property. You can also gain a higher percentage of mortgage funding with resale property.

Low Money Down We offer the complete package in Scotland including bridged deposit, resulting in Low Money Down property purchases.

Easy Legals Most investors know that the legal system in Scotland is different from England. We describe the process in this Smart Guide. The bottom line is that it's easier to buy in Scotland and there is less likelihood of the deal falling through.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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What Type of Property Does Axis Offer In Scotland? The majority of our investment properties offered in Scotland are what we call Type 2: Resale properties. Each property offered is individual, either an apartment or a house and generally located in one of Scotland's four major cities. What you can be sure of is: a) All properties will be substantially discounted from true RICS (Royal Institute of Chartered Surveyors) current valuation. Typically in the region of 25%. b) All properties will have a generous rental yield - typically a minimum of 7.5% gross. c) All properties will be fully packaged for a Low Money Down deal using assisted deposit finance. Typically this means that the total investment required, including all fees and costs, is in the range of ÂŁ5,000 to ÂŁ10,000. d) Most properties will come with the Axis Five Star Guarantee, including a 12 month rental guarantee! Check it out at http://www.axispropertyinvestment.com/five-starguarantee.html

What Kind Of Investor Is Scottish Property Appropriate For? Most properties, as we have mentioned, are Axis Type 2 Resale Property. This investment strategy is perfect for investors who prefer to avoid large developments and new property. Resale property tends to have higher rental yields and it is easy to compare both market price and rental value. For these reasons the risk is lower and this suits investors with a conservative approach but still requiring good rental returns. If we now add Scotland into the mix, our view is that investments here are a little more conservative and reliable than the rest of the UK. Prices didn't go up as high in the recent boom, nor have they suffered so much in the 'bust'. Investors can reasonable expect fair growth and solid performance - which is a very positive attribute for property investors. If you want minimum hassle, low risk, a good choice of well priced property with excellent discounts and high rental yields, then Scotland should be on your shortlist of 'first choice' property locations.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Sample Properties These pages illustrate the type of properties available which change on a continuous basis. Please call us for the current list of property or download from http://www.axispropertyinvestment.com/uk.html.

Blythswood St, Renfrew, PA4 8NU

Property Type: 1 Bedroom Flat Accommodation compromises of: Hall, Lounge, Kitchen, Bedroom 1 and Bathroom

Structure of deal: v

Market value £75,000

v

Investor price £56,250

v

Discount from market value 25%

v

Immediate equity £18,750

v

Purchase price on contract will be full Market Value price

v

Estimated rent £350 pm

v

Rental yield of 7.46%

v

75% LTV Mortgage available subject to status

v

25% deposit provided through bridging facility

v

Reservation of £1,000 required to secure purchase (final balance reduced by £1,000)

v

Investor to use recommended solicitor

v

Lettings and management service available

Financial details: Based on BM Solutions 75% LTV 4.70% interest rate. 2 year tracker v

Loan amount of £57,937 (including 3.0% arrangement fee)

v

Monthly payments based on 4.70% interest rate of £227

v

Rental income of £350 pm

v

Cash positive rental income of £123 pm

v

Total cost to purchase c. £6,000

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Hattonrig Rd, Hamilton, ML4

Property Type: 1 Bedroom Flat Accommodation compromises of: Hall, Lounge, Kitchen, Bedroom and Family Bathroom

Structure of deal: v

Market value £67,000

v

Investor price £50,250

v

Discount from market value 25%

v

Immediate Equity ££16,750

v

Purchase price on contract will be full Market Value price

v

Estimated rent £350 pm

v

Rental yield of 8.35%

v

75% LTV Mortgage available subject to status

v

25% deposit provided through bridging facility

v

Reservation of £1,000 required to secure purchase (final balance reduced by £1,000)

v

Investor to use recommended solicitor

v

Lettings and management service available

Financial details: Based on BM Solutions 75% LTV 4.70% interest rate. 2 year tracker v

Loan amount of £51,757 (including 3.0% arrangement fee)

v

Monthly payments based on 4.70% interest rate of £202

v

Rental income of £350 pm

v

Cash positive rental income of £148 pm

v

Total cost to purchase c. £6,000

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Pond Walk, St Helens

Property Type: 3 Bedroom semi detached Accommodation compromises of:

Ground Floor: Hall, Lounge/Diner, Kitchen. First floor: Bedroom 1, Bedroom 2, Bedroom 3 and Family Bathroom

Structure of deal: v

Market value £85,000

v

Investor price £63,750

v

Discount from market value 25%

v

Immediate Equity ££21,250

v

Purchase price on contract will be full Market Value price

v

Estimated rent £450 pm

v

Rental yield of 8.47%

v

75% LTV Mortgage available subject to status

v

25% deposit provided through bridging facility

v

Reservation of £1,000 required to secure purchase (final balance reduced by £1,000)

v

Investor to use recommended solicitor

v

Lettings and management service available

Financial details: Based on BM Solutions 75% LTV 4.70% interest rate. 2 year tracker v

Loan amount of £65,662 (including 3.0% arrangement fee)

v

Monthly payments based on 4.70% interest rate of £257

v

Rental income of £450 pm

v

Cash positive rental income of £193 pm

v

Total cost to purchase c. £6,000

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Wallace Place, Kirkmuirhill, Lanark, ML11

Property Type: 3 Bedroom Semi detached Accommodation compromises of: Ground floor:- Hall, Lounge, Kitchen and Dining Room First Floor:- Bedroom 1, Bedroom 2, Bedroom 3 and Family Bathroom

Structure of deal: v

Market value £93,000

v

Investor price £69,750

v

Discount from market value 25%

v

Immediate Equity £23,250

v

Purchase price on contract will be full Market Value price

v

Estimated rent £450 pm

v

Rental yield of 7.74%

v

75% LTV Mortgage available subject to status

v

25% deposit provided through bridging facility

v

Reservation of £1,000 required to secure purchase (final balance reduced by £1,000)

v

Investor to use recommended solicitor

v

Lettings and management service available

Financial details: Based on BM Solutions 75% LTV 4.70% interest rate. 2 year tracker v

Loan amount of £71,493 (including 2.5% arrangement fee)

v

Monthly payments based on 4.70% interest rate of £280

v

Rental income of £450 pm

v

Cash positive rental income of £170 pm

v

Total cost to purchase c. £6,000

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Your Questions Answered I'm concerned about managing the property when it is so far away! This is a major decision for all investors. Do they invest locally or further afield? The best answer I can give is based on my own experience. I have a specific investment strategy which I cannot achieve where I live (Brighton, South Coast). Properties are too expensive and yields are too low. So almost all my portfolio is in the North West. I haven't visited my properties for 4 years - in fact not even the properties closest to me! The issue is simple. Once you have good management in place then you don't need to visit - it will all be handled for you. Some investors like to micro-manage everything and I respect that. For these investors buying at a distance will never be comfortable. Other investors are only too happy to delegate the management and don't care if they invest the other side of the world. You need to decide which camp you fall into and whether you are comfortable with the distance. Like most things, familiarity makes things easier and so your first investment will always be the most difficult.

What equity will I have in the property? You will have 25% equity in the property, calculated from a RICS valuation, not some 'guestimate'! So you will buy a property with a true value of (say) £100,000 for £75,000, giving you £25,000 instant equity.

What costs are involved? There are various fees and costs as there are in any property transaction: · · · · ·

Legal fees Bridging fees Mortgage arrangement fees Axis finders fee Disbursements etc

Typically these will amount to around £5,000 to £10,000 depending on the property. The Axis approach to "Low Money Down" ensures that this is way below the £30,000 or more that you would have to contribute to a traditional purchase transaction, and you also benefit by the substantial equity due to our negotiated discount on your behalf. How long does it take to complete a purchase? Typically 6-12 weeks. The entire process takes longer than it used to.

What do I need to qualify for a mortgage? This varies according to lender but a good start would be: 1. 2. 3. 4.

Own your own property and have no mortgage arrears Earn at least £25,000 per year, provable for three years Excellent credit score. No CCJ's, no defaults UK Resident

If you think you could be borderline we can arrange to have a Decision in Principle done prior to you reserving a property. (c) 2010 Axis Property Investment. All rights reserved worldwide

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Do I rent unfurnished or furnished? The great majority of properties will let unfurnished. Landlords prefer this - less wear and tear and less hassle - and many tenants have their own furniture. Tenants with furniture tend to stay longer as you might expect. However, contract workers, students and young people usually require furnished accommodation and where appropriate it is worth furnishing cheaply to gain the maximum rent.

Where will the investment property be located? We have property finders in all major city locations.

Clearly the discount we can obtain and the real rental yield obtainable determine location to a great extent. Properties in Paisley, Irvine and Kilwinning tend to be less expensive to buy than those in Ayr, Troon and Prestwick - yet rental levels are either slightly below or equal to the more expensive housing areas. Over the last thirty years there has been a boom sales market in London and investors have used the ‘next station along’ principle when speculating in property. This ripple effect can be seen in Glasgow’s West End, Kilmarnock and Ayr. The current upgrading of the A77 and continued expansion of Prestwick Airport is having a very positive effect on house prices throughout Ayrshire. In general properties are sourced from the Glasgow-Edinburgh corridor and down the West coast to Ayr. We tend to avoid cities further north where rentals are less certain and rental yields lower. Dundee and Aberdeen are occasional exceptions to this.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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About Scotland

Many leading global corporations have chosen to invest in Scotland. With a world-class education system, several thriving economic sectors and a long-standing culture of innovation, Scotland is the ideal destination for business investment and the number one location for research and development. Scotland is at the forefront of the world in a number of important industries from pioneering nanotechnology to the development of new drugs to combat cancer. Opportunities to invest in Scotland exist across several key industries, including: · · · · ·

Energy Food and drink Life sciences Textiles Tourism

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Scotland's Major Cities Glasgow (pop 1,179,000)

Owning property in the City of Glasgow is more exciting than ever. Why? Because of major public investment in the City as well as significantly increased property investment in Glasgow, by private investors, developers and other interest groups. Glasgow is described by many as a lively and cosmopolitan place to be, with the pulse of a modern-European city at its core. The property market reflects this. From properties with a strong Victorian, historically-inspired architecture refurbished by local developers and numerous new developments, investors have the opportunity to profit and benefit from this reshaping and rekindling of the gentle spirit of this age-old UK city. For many, Glasgow has become the place of choice to visit, live and work. Boasting great shopping some compare with London and a lively aspirational nightlife, as well as many tourist attractions like museums, art and science centers, Glasgow is fast becoming a superb destination for people to live and therefore property investors fulfilling the increasing demand for rental property.

Planning, development and regeneration have topped the business headlines over the last few years, including mixed-use, retail and residential projects. This opens a whole range of possibilities for investors to capitalize on. Glasgow Cross is a good example of one such project. This is a ÂŁ40million mixed-use regeneration development project by a major developer. It consists of 18,000sq ft of retail space and 170 two and three (c) 2010 Axis Property Investment. All rights reserved worldwide

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bedroom luxury apartments with parking. It is easy to see the potential here, what was once an older, somewhat quiet and run-down part of the city has been revived with lots of investment property available. Mixed residential/retail type configurations in ‘downtown’ Glasgow has now become a reality. From apartments in the heart of Glasgow, to homes and low-rises on its outskirts, there is something to suit every budget, preference and taste. Glasgow harbour and city centre add to the variety. With lots of parks and restaurants around to mingle and linger in, you'll understand why many people decide to stay, relocate, work or visit Glasgow every time they can! Glasgow is one of the country's most attractive business destinations, and an ideal location for property investment. Clients selecting property investments in Glasgow will be ideally positioned to take advantage of the city's thriving business growth.

Edinburgh (pop 467,950) The strength of the property investment market in Edinburgh is boosted not only by the many business opportunities in the city itself but also in its potential as a base or weekend home for those working in other major UK cities. Edinburgh has long attracted visitors and many people who choose to stay. It's the second most visited city outside of London with over one million visitors, the 7th largest city in the UK and has one of the lowest unemployment rates.

Edinburgh has breath taking landscapes just minutes away, a thriving economy and superb job opportunities. Plus a world leading university that attracts students from more than 60 countries. (c) 2010 Axis Property Investment. All rights reserved worldwide

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To top it all, Edinburgh is known for it's arts and entertainment. The Edinburgh festival alone grosses more than £100 million! As you might expect, Edinburgh property and rental prices are typically higher than Glasgow and approach those of Southern England. Edinburgh accommodates a wealthier clientele than Glasgow.

·

Property

·

type

Monthly Rental Income

·

1 bed

·

£568

·

2 bed

·

£722

·

3 bed

·

£1,005

·

4 bed

·

£1,357

Aberdeen (pop 192,000) Aberdeen is Scotland's third largest city and one of the major European hubs of the global oil industry. For the last 40 years it has attracted strong inward financial investment and supports a thriving and cosmopolitan population.

Apart from oil, the educational, social and cultural assets which Aberdeen has in abundance have long attracted people to Scotland's third largest city, both to live and work.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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The relatively small and compact city has a wide diversity and quality of housing stock to offer. Ranging from flatted apartments and contemporary housing to substantial dwelling houses constructed from the famous Aberdeen granite. Because Aberdeen property is diverse, attractive and affordable, there is a superb choice of accommodation available for people interested in renting property in Aberdeen. The modern architecture of many new Aberdeen properties provides an interesting variety amidst existing granite Victorian and Georgian buildings. Today, further new developments around the city, such as Kepplestone, Eastbank and Westbank, provide modern alternatives and find favour with those who prefer state-of-the-art architecture to that of the more traditional Georgian and Victorian properties in Aberdeen.

Dundee (pop 151,800) Scotland's fourth largest city, Dundee is a thriving regional and commercial centre situated on the banks of the River Tay on the east coast of Scotland.

Home to a diverse economy - from a pioneering life sciences community to a groundbreaking digital media industry - Dundee's key sectors also include: engineering, telecommunications, energy, tourism, electronics, health, retail and education. Dundee is internationally renowned as a knowledge economy and is recognised as a model for economic development in the 21st Century by the New York-based Intelligent Communities Forum. With two universities, a world famous teaching hospital, a major further education college and the unique Al-Maktoum Institute for Postgraduate Education in Islamic & Arabic Studies, the city has one of the highest/student population ratios in Scotland at more than 1 in 6. More than ÂŁ500 million is being invested in Dundee's infrastructure and public facilities including a flagship ÂŁ300 million regeneration of the city's waterfront and a ÂŁ200 million transformation of the University of Dundee's campus in the city's cultural quarter.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Other investment projects include US pharmaceutical giant Wyeth's creation of a £50 million translation medical research centre and the building of a new £12 million headquarters for the Alliance Trust, one of the UK's largest investment fund companies. Dundee is the first Scottish city to become a Fibrecity, meaning that businesses, organisations and residents have access to Fibrespeed - the fastest way of sending and receiving data.

The Scottish Legal Process

The typical process for purchasing a property in Scotland is straightforward; 1. You instruct your solicitor verbally over the phone or by email to act on your behalf. 2. The solicitor will need to request identification documents for money laundering regulations. 3. You then instruct the solicitor to send an offer to purchase the property at the agreed price to the sellers solicitors. This is a formal document that forms part of the missive (which is the equivalent of a contract). 4. The offer to purchase is then accepted by the seller and any further conditions are agreed between solicitors and inserted into the offer, which now becomes the missive. 5. Once all parties are happy with the missive, you are formally requested to conclude the missive (which is the equivalent of exchanging contracts). This is done with a simple phone call giving the solicitor the authority to conclude the missive on your behalf. This is the usual standard practice to conclude the missive about a week after the offer is formally accepted. However we can usually work it where the buyer concludes and settles on the same day. 6. You solicitor inserts “the date of entry” into the missive (which is the completion date). This is the date you are legally bound to settle (complete) the property. You are given the usual 14 day notice period if you fail to settle on the date of entry, where you will be liable for interest set at the default rate. This is the same in England. 7. In the meantime your mortgage finance is being arranged. The valuer is instructed, and we await the mortgage offer, which in Scotland are referred to as Loan Papers. 8. Once Loan Papers are issued the solicitor will then write out to the buyers with the usual report on title, along with the standard security document for the lender and the stamp duty tax form. When a single person is purchasing a property they are sometimes required to fill out a Matrimonial Affidavit. This is to protect the purchaser from any claims against the property. It is not always required and only randomly is requested. 9. These documents need signing and returning asap. 10. The solicitor will send out completion statement to client. 11. Once the solicitor has the returned docs, they can then request funds from the lender and the required deposit for the buyer. 12. When the solicitor receives funds. they complete the transaction and you are the owner of your investment property.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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What Next? If you like the idea of investing in Scottish property, then it's time to take a step forward.

Step One Get your questions answered:

Call our UK Property Helpline 0333 444 0034 Email us

questions@axiscontact.com

Step Two Check out currently available Scottish properties: www.axispropertyinvestment.com/uk.html Note that Scottish properties that meet our strict criteria are difficult to find, and therefore you may not see properties available at the time that you check. In this case it's really important that you call us and advise you are interested. We will add your name to our 'hot list', with no obligation and you'll be the first to know about new properties in Scotland.

Step Three Ready To Invest? Contact us as above and discuss available options.

Contact Details Axis Property Investment Gemini Business Centre 136-140 Old Shoreham Road HOVE, BN3 7BD T: 01273 447 300 E: admin@axiscontact.com F: 01273 203 073 W: www.axispropertyinvestment.com

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Legal Disclaimer This document is COPYRIGHT 2010 Actium Property Ltd. All rights reserved worldwide. This document may not be copied, distributed or made available without the written consent of Actium Property Ltd except to any authorised professional advisors of the investor who has received this document as a result of being on the mailing list of Actium Property Ltd. This presentation is subject to the terms and conditions of Actium Property Ltd, contained in the Client Engagement Contract which all clients are required to read and sign prior to entering into any business with Actium Property Ltd. The Client Engagement Contract contains disclaimers and restriction of warranties that apply to this and any other property presentation from Actium Property Ltd This is not an offer to solicit investment, but a presentation of available property. Actium Property Ltd does not provide financial or investment advice in relation to whether this property is suitable or appropriate for any particular investor. We strongly recommend that you take appropriate professional advice before entering into any contract to purchase property of any description, including this one.

Misrepresentation Act 1967 Notice

Actium Property Ltd hereby give notice that:- 1) We have prepared these sales/lettings particulars as a general guide and they do not constitute any part of an offer or a contract. 2) All descriptions, dimensions, reference to condition, necessary permissions for use in occupation are made without responsibility on the part of Actium Property Ltd. 3) None of the statements contained in these particulars are to be relied on as statements of representations of fact. 4) We have not carried out a survey nor tested the service, appliances or specific fittings. Room sizes should not be relied upon for carpets and furnishings and any intending purchaser or lessee must satisfy themselves by inspection or otherwise as to the correctness of these particulars. 5) Actium Property Ltd do not make or give nor any persons in their employment has any authority to make or give any representation or warranty whatsoever in relations to this property. 6) If there are any important matters which are likely to affect your decision to buy or rent, please contact us before viewing the property. 7) No liability is accepted for any travelling or other expenditure incurred, including legal costs by prospective Purchasers in viewing the property or making further enquiries, that may have been sold, let, withdrawn or subsequently let or sold to a third party.

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Copyright for all images remains with Actium Property Ltd. Al enquiries regarding use of and purchasing prints and image use rights must be directed to the Copyright holder. All rights reserved. All images included herein this publication are the copyright and property of Actium Property Ltd. All images and text are copyright in accordance with the terms of the United Kingdom's Copyright, Designs and Patent Act 1988, and are protected under the United Kingdom Copyright, Designs and Patent Act 1998, and international copyright laws and treaties. These laws impose substantial penalties for infringement, and violators will be prosecuted to the full extent of the law. The use of any images or other materials included herein, in whole or in part, for any purpose other than for the private purpose of the user, including, but not limited to, copying, reproduction, publication (including on Internet Web Sites including third party web pages by any means, including "hotlinking", storage in a retrieval system (other than internet browser), manipulation (digital or otherwise), or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, is expressly prohibited without the written permission of Actium Property Ltd. All artistic and moral rights of the author are hereby asserted.

(c) 2010 Axis Property Investment. All rights reserved worldwide

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Property Investment In Scotland