Economics of Independence Scotland's Economy

Scottish housing market strengthened by Independence

Scottish property marketHaving been a domestic conveyancing solicitor for 35 years I have witnessed the booms and busts of the domestic property market throughout Scotland; the scramble for limited mortgage funds of the late 1970s to the over abundance of paper money in the 2000s; from mortgage interests rates of over 17% to today’s artificially low ones; from no separate charge to arrange mortgages to the grotesque mortgage arrangement fees endemic in the current system.

I have watched mortgage lenders remove decision- making from their local branch managers to the tick box culture of centralisation overwhelmingly based in the South and according to English and Welsh conveyancing practice despite Scotland’s unique and more robust property laws.

In 1997, I established Conveyancing Direct Ltd to provide sellers and purchasers of Scottish houses with an efficient, friendly and cost effective legal service anywhere in Scotland. Despite the worst that the Credit Crunch could throw at us we survived and are one of the largest conveyancing practices in the country.

House purchasers and sellers have much to gain from Scottish Independence

When asked, major UK mortgage lenders will confirm that the Scottish housing market is a lower risk to them than the English one.  We have not suffered helter skelter price variations which is a cyclical feature of the Home Counties.  Both the average amount and the percentage loan-to-value of Scottish mortgages are lower.  Repossessions as a percentage of UK lenders’ mortgage books are lower in Scotland and the losses incurred proportionately smaller than what pertains in the South.

Having attended the Council of Mortgage Lenders’ Conferences in London their representatives never tire of telling Scots present that they know they are less exposed in the Scottish housing market and that our regulatory regimes for solicitors are more robust.  Yet when they are challenged to reflect this in their lending criteria and lending terms their response is that as they operate on a UK level and there is no room for meaningful regional variations.

Scottish mortgage interest rates may even reduce after independence

For anyone to seriously suggest that lenders would seek to increase mortgage interest rates above those in the rUK when Scotland becomes independent flies in the face of the market which is both now risk averse and will compete for the low risk Scottish market. Enhanced Scottish Government support for those in mortgage arrears gives added comfort and confidence to mortgage lenders.

Apart from the benefits which Scotland’s low risk mortgage market has for lenders there are opportunitites for both lenders and borrowers alike once Scotland is Independent.

Streamlining of mortgage processing to meet the requirements of Scottish conveyancing practice as opposed to the comparatively pedestrian progress of an English and Welsh purchase is an obvious incentive for those competing for the Scottish market by establishing  dedicated Scottish mortgage processing centres; our more coherent law enforcement agencies to tackle mortgage fraud and money laundering crimes working in consort with mortgage lenders, the Scottish Taxation Services, solicitors and our Land Register can exclude the fraudsters and their dirty money.

The idea of a mortgage free-for-all is a notion which has never sat easily with Scotland’s more conservative approach to home ownership.  Mortgage lending is not just a right of mortgage lenders authorised to do so by the financial regulatory authorities; it is also a privilege.  Lenders have a financial interest in mortgaged property, and within their lending rules borrowers are obliged to maintain their properties, yet lenders never take the responsibility for ensuring that their assets, the houses, are maintained to a reasonable standard.  If they did, then early signs of financial distress among vulnerable borrowers could be addressed with the help of money advice and other agencies and reduce repossessions further.

Independent Housing Markets

My biggest fear if we remain part of the UK mortgage market comes from the rules and norms dictated by the City of London and its Westminster twin which create the huge disparity between the amounts borrowed in the South East of England as against similar properties in Scotland.  The gulf is ever widening; the ubiquitous and unexceptional three bedroomed Victorian terraced house covering large parts of London is regularly commanding prices in excess of £800,000 as opposed to the self same house in Scotland achieving £150,000.  Former council houses in the commuter land of St Albans attain £300,000 when similar houses sell for under £100,000 in Scotland.

These disparities are a huge disconnect which is unsustainable and injects significant risk into the housing market.  London salaries as a rule are not 4 or 5 times what Scots earn to do the same job.  What fuels that market is paper money which has no substance.   The factors at play in London and the South East will have a day of reckoning which we in Scotland are unable to influence far less control if we are still tethered to the centralised UK government.

Independence provides the platform to protect the roof over our heads, which is essentially one of the basic needs of the people of Scotland.

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About the author

Graeme McCormick

Graeme McCormick established Conveyancing Direct, Solicitors in 1997 to provide an efficient, cost effective and IT driven house purchase and sale service throughout Scotland.

It quickly grew to become the largest dedicated domestic conveyancing service in the country completing around 4000 transactions each year.

80% of its business comes direct from the public, while the remainder is sourced through property professional introducers.

Graeme is a regular media commentator on the Scottish housing market and unpaid advisor to both public and private corporations in the best traditions of the Scottish legal profession.


  • If paying a sterling based mortgage in a new Scottish currency then exchange rates would have to be taken into consideration. Also separation will cause a Westminster meltdown with a consequent jump in interest rates.

  • Graeme

    As a fellow conveyancer of much the same vintage as you, I have also seen the twists and turns of the mortgage market over the years. The problem with your analysis, from independence point of view, is that exactly the same view of a market dominated by London would be held in Newcastle, Manchester, Bristol and Plymouth.

    The problem with London being in a different universe is solved by the creation of a proper federal structure for the whole of Britain. By doing that appropriate measures can be taken to deal with London and separate measures taken to deal with the requirements in regions outside the capital.

    Your argument doesn’t hold water as regards the position of Scotland following a “yes” vote. The financial crisis of 2008 showed that the Scottish market was not immune from the effects of a financial bust as against a normal recessionary bust which had been the way of things in the UK for the last 50 years.

    The impact of independence would be, at best, to depress the housing market and to lower prices. That would simply be a function of uncertainty as against any broader interpretation of the questionable economics of the “yes” campaign. If you do not believe me then read the eminent economist and Nobel Prize winner Paul Krugman in the New York Times last weekend who certainly has no axe to grind for the UK state. The certainty of increased mortgage rates in Scotland added to the reduction in prices would create intolerable pressure on the market which is only just recovering from the 2008 crash.

    An alternative conveyancer’s view is expressed at of the likely outcome following a “yes” vote. In all fairness there have been a raft of articles in the last few days from the mortgage intermediaries Association, eminent economists and experts in the housing market which are very similar to the view expressed at

    In summary, the “yes” vote have been able to obtain momentum from the anger and distaste of the general population towards the Establishment and the “black hole” that the south-east of England represents for the rest of the UK. By its very nature a “yes” vote is a disruptive event and the reaction of financial markets to such events is always negative and generally excessive. The problem as I see it is that the normal person in the street who is being attracted by the “change” argument is the person who is going to lose most when house prices are depressed and interest rates spike (as lenders respond to the perceived risk factor in Scotland, even if they actually want to lend in Scotland which is another thing entirely).

    The belated Devo Max offer is a great result for Scotland. It can only be hoped that similar rights will follow for the other regions in the UK. That would unleash the natural competitive spirits within the UK and reduce the sapping and dependency culture impact of the mega-city situated in the south-east.

    • There is no devo max on offer thats just the same list of powers that were offered months ago with a timetable that is constitutionally impossible to implement.

      A yes vote is not anti anything its is pro progress in Scotland and it need not be disruptive at all after the YES vote negotiations will very quickly focus on how to reach the most mutually beneficial agreement between Scotland the rest of the UK there will be significant change but disruption will be minimised.

  • I’d like a little more clarity on this. I understand your point about lenders considering the Scottish property market to be less volatile, but lenders alone do not set interest rates. If the international markets see an independent Scotland as more risky – perhaps because we keep suggesting that we’ll renege on our debts, then our credit rating will be lower. As it is, it is being predicted as an A, well below that of the UK. So borrowing for everyone will get more expensive – some suggest £1700 pa on the average mortgage. Why is this not true. Also, your last para, I’m not sure of the point you are making? Are you saying that London buyers are borrowing more than they can afford, or that their homes are only worth what it would be if it were elsewhere in the country?

    • Hi Kirsty, I am by no means an expert on the exact science of how mortgage lenders set their interest rates however the one thing i do know is that no two lenders offer the same rate. Everyone of them takes the bank of england base rate amd then adds their own perecntage interest on top depending upon risk etc etc. The current BOE interest rate is 0.5% The average interest rate for a variable mortgage in the UK is 4.8%, a full 4.3% above the BOE rate. The 4.3% is the part that the lenders control and as the author says we are paying well over the odds on the largest and most significant part of the total interest rate because the english market is risky

      • If you aren’t an expert and don’t understand how lenders work out their rates, how can you give an opinion on the likely effects of independence on a mortgage? The reason the base rate is only 0.5% is because the UK has an AA1 rating. If this dropped, the base rate would go up and it wouldn’t matter what lenders did.

        • Graham is right there is flexibility in offers than can be made within an independent Scotland, but you also need to consider that if there is no currency deal then the rUK will have responsibility for all the debt and the RUK debt to GDP ration will mean the rUK is likely to lose its AA1 rating anyway.

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