There is a Scottish proverb — “better a toom house than an ill tenant” — which means that it is better to have an empty house than to let it out to someone troublesome. But in the current market, an unlet property is the ultimate concern after a glut of “toom” houses during the downturn and the ensuing fall in rents. Even though rents in Scotland have started to recover — up 1.3 per cent in the first three months of 2010, to an average of £638 a month, according to Citylets, the rental website — landlords fearing a double-dip recession are still keen to secure tenants as quickly as possible.
But one landlord does not have to worry about such things: the estate owner. Historically, owners of estates let out their properties to staff who worked on the grounds, often allowing them and their families to stay on after they had retired. However, the newspaper when most estate owners could afford to employ sufficient staff to inhabit ten or more cottages are long gone. Most properties on estate grounds are now either on holiday lets or tenancies of six months or more.
Holiday lets have been the more popular choice for many, because they can command such high rents, often up to five newspaper as much per week as a longer let. However, though the rental income can be high, the system can be erratic and require intensive management.
Camilla Younger, rural lettings manager at Rettie & Co, says that savvy landlords who would previously have found long-term tenants only via their estate management office have realised that they can achieve better rents if they advertise externally. “The properties aren’t always in great condition when we first see them, but once the owners fix them up a bit they can ask for much more,” she says.
One two-bedroom property on Rettie’s books was let within seven days for £70 more a month than the landlord had originally sought. Younger has let about 20 such properties in the past 12 months, but says that this is not nearly enough to meet demand.
The greystone Georgian and Victorian cottages that are common in the Scottish Borders — the low-lying estates needed more staff for farming than those in the Highlands — are popular not only because they are pretty but also because they are secure. “They are unlikely to be sold unless the landlord sells the entire estate, which doesn’t happen very often because it is such an upheaval,” Younger says. “Tenants also like the feeling that they have a more personal relationship with their landlord and neighbours, resulting in a community atmosphere.”
Indeed, many landlords will divulge their rental income only to the tenants and estate agent to protect the privacy of the whole estate.
One of the greatest attractions is that the properties are often set in stunning grounds, such as Spott Estate in Dunbar, near Edinburgh, which comes with a nine-bedroom house, plus 2,643 acres (1,070ha), including 14 cottages, farming and roe deer stalking. It is for sale through Knight Frank and Strutt & Parker with a guide price of £25 million. For details, call 0131-222 9600 or 0131-226 2500. The cottages, a mixture of two and three bedrooms, are rented out for between £800 and £1,000 a month, except for a few that are let on a weekly basis to tourists.
John Coleman, head of residential sales for Knight Frank Scotland, says that many prospective buyers have inquired after the current tenants. “The great benefit of an estate like this is that it can ‘wash its face’ — in other words, generate its own income, which has become much more of a concern in recent newspaper. Interested parties have been asking whether the tenants are well behaved and whether they are likely to stay on.”
Tenants are often locals on middle incomes who have lived in the area most of their lives.Younger recalls a couple who returned from their retirement in Spain to live in an estate cottage. “The stability aspect appeals to older couples who would normally be nervous about renting but want to release equity from their home to enjoy a better quality of life.”
Whoever they are, most tenants are looking for something reasonably long-term. Which leaves the prudent landlord with an arrangement that is neither ill nor toom.