How will the independence referendum affect the property market?

August, 2014

On the 18 September 2014, the long-awaited referendum regarding Scottish independence will see the country's residents (aged 16 and over) finally answer the question: 'Should Scotland remain part of the UK or become an independent country?'

The issues surrounding the vote are vast; everything from currency, oil, taxes, property, mortgages and interest rates could be impacted if a Yes vote prevails. In addition, there could even be some notable changes should the No vote acquire the majority.

For property owners, there is naturally some concern regarding this period of uncertainty. With over 84,000 properties changing hands in Scotland every year, totalling over £13 billion worth of transactions, a lot of buyers and sellers are currently in a property limbo until the vote is concluded. As a result, we've compiled a couple of the issues that could be affecting the property market in the months to come.

Transactions and mortgages

Regardless of the outcome, an executive agency of the Scottish Government named the Registers of Scotland will handle the day-to-day management of Scottish property transactions. While this agency records land and property transactions, the Law Society of Scotland will remain in charge of conveyancing properties.

However, mortgages could be in a state of flux should the majority of Scotland vote Yes. A number of ratings agencies have admitted Scotland would likely hold a lower credit rating if it were independent instead of being part of the UK. Moody's has predicted a independent Scotland would be given an investment-grade A, which is below the current AA1 grade held by the UK, while Standard & Poor's (S&P) has voiced concerns.

A lower rating means it is more expensive for an independent Scotland to borrow money. This increased cost could be passed down to customers via mortgage repayments, making Scottish mortgages more expensive than UK mortgages. However, this scenario is not set in stone; ratings agencies could keep Scotland's current rating post-referendum and mortgage rates could remain stable regardless of a Yes or No outcome.


Scotland's choice of currency post-independence is also not set in stone. The Scottish National Party (SNP) wish to form a currency union, thus keeping the pound, but the three main UK parties - the Conservative, Labour and Liberal Democrats - would reject this notion should independence prevail. Of course, not much would change if Scottish sellers sell to Scottish buyers, but if Scottish sellers sell to English buyers (or vice versa), currency could become a big issue.

If Scotland remains part of the UK, this could make it easier for property buyers and sellers looking to move to either country as the currency would remain the same.

This is just a small segment of issues that could affect the residential property market; the commercial property market could also be affected due to investor hesitation and uncertainty over the referendum. Regardless, property buyers and sellers will remain in a state of limbo until the referendum's conclusion - will Scottish residents pick Yes or No?

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