Where is it?

Edinburgh, Scotland's capital and second largest city is located on the southern shores of the Firth of Forth on the North Sea.

What's so special about it?

Affectionately known locally as 'Auld Reekie' (Old Smoky), Edinburgh's history can be traced back to the first century, but it wasn't until 1437 that it officially became the Scottish capital. The city is one of the most prosperous and popular cities in the UK, second only to London, and each year it welcomes over 13 million visitors. In 1995 the Old Town and New Town districts were listed as a Unesco world heritage site.

Best kept secrets Unlike other parts of the UK, Edinburgh has been enjoying a 'property boom' in recent years. Sales were so strong towards the end of last year that Edinburgh estate agents have reported that demand is now outstripping supply. The Edinburgh Solicitors Property Centre (ESPC) reported that more properties were sold in Edinburgh in the final quarter of 2006 than in any quarter since their records began 36 years ago, and in some areas prices rose by 20%.

Who lives here?

As a cultural and educational icon the city has been home to many influential and entertaining figures. Those born in the city include Alexander Graham Bell, Charles Darwin, Sir Arthur Conan Doyle, JK Rowling, Robert Louis Stevenson, Irvine Welsh, Sir Sean Connery and British prime minister Tony Blair.

What's the property market like?

The ESPC reported that almost stg£1bn in property was sold in the last three months of 2006. This represented an average growth of 11.1% and marked the third consecutive quarter in which annual price inflation exceeded 10%. A number of trends have emerged.

Many 'empty nesters' have been downsizing their large family homes to apartments, which has led to bidding wars for large homes in areas such as Murrayfield, Calton, The Grange and Barnton, but also a demand for penthouses closer to the city.

To prevent lower income workers being pushed out of the market, the council is to spend stg£3m buying flats for affordable housing for families earning less than stg£32,500. Property agents Jones Lang LaSalle reported in late 2006 that commercial property in Edinburgh was also on the increase and in 2006 sales increased by 42%.

How do you go about buying property?

The process is quite similar to Ireland and straightforward. If you see a property you like you must inform your solicitor to make a 'note of interest' to the selling solicitor.

Once the closing date for offers has been met, the seller will then set a closing date for bids. After a property survey has been carried out bids are submitted and once the closing date has passed the seller's solicitor will inform all the bidders of the seller's decision and issue contracts.

Where are the best places to buy?

The biggest demand for property in the city has been for one-bed flats in the Leith Walk and Gorgie/Dalry areas as first-time buyers attempt to get on the market. ESPC research found that two-bed flats were more popular in areas where there is a high number of young professionals, such as in Stockbridge.

Four-bed homes outside the city centre are still in short supply and so are very popular, especially in upmarket areas such as Murrayfield. For empty nesters, downsizing properties in St Vincent Street or Fettes seem to be the areas of choice.

With inner city prices rising, areas outlying the city - such as Stirling, Dunfermline, Falkirk, East and West Lothian - have also increased in demand as prices are not as high.

What's the rental market like?

Research from brokers Landlord Mortgages found that rental yields across the UK hit a five-year low in 2006 and across Scotland yields dropped from 8% in 2002 to 6.5% in 2006. While the drop in Scotland was the steepest in the UK it was still higher than anywhere in England, including London. However, the research found that Scottish towns such as Edinburgh are still popular as it has a healthy student population looking for rental accommodation. A survey by Penrose Financial Public Relations found that 84% of mortgage brokers expect to see an increase in buy-to-let lending in 2007, but the Edinburgh rental market recorded a slump in rental yield for two-bed properties as the market was oversupplied.

What's the resell market like?

With empty nesters downsizing the market for large out-of-town resale properties is still very high as this type property is in short supply.

Average property prices?

ESPC data revealed that the average price of a property in Edinburgh was stg£197,207, a jump of 11.1%. The biggest price increases were in Leith, which saw prices rise by over 20%. However, this was mainly for one-bed flats, with an average cost of stg£112,990.

What are the tax breaks with Ireland?

Stamp duty is exempt on properties under stg£120,000, 1% on properties up to stg£250,000, 3% for properties up to stg£500,000 and 4% for properties over stg£500,000. Ireland and the UK have had a double taxation agreement for some years but income from property in Edinburgh should be registered with the Irish Revenue.

FAST FACTS

Getting there: Aer Lingus and Ryanair fly from Dublin. Ryanair also flies from Shannon.
Area: 260sq km
Population: 448,624
Weather: A temperate maritime climate with temperatures ranging from 0°C in February to 19°C in summer.
Transport: As well as local city bus services, Waverley Station is a main hub for the Scottish rail system and Edinburgh has fast and efficient rail and road links with London.
Going out: The Royal Mile around the castle and Rose Street is popular with tourists. Most of the modern clubs are around Cowgate and Lothian Road.
Eating Out: Edinburgh is a great city for food lovers, with the best eateries found on Rose Street or in Leith or the West End. The Elephant House is the café where JK Rowling wrote Harry Potter. Alternatively you could go to a chippy for a battered haggis or deep fried Mars bars.
Shopping: The Old Town is ideal for tourist trinkets, while Jenners is the oldest department store in the UK.
George Street and Multrees Walk house the big labels.

USEFUL CONTACTS

» Irish Consulate in Edinburgh: 0044-131 226 7711
»British Embassy in Dublin: 01-205 3700; www. britishembassy. ie
» Bank of Scotland: www. bankofscotland. co. uk
»The Scotsman Newspaper: www. scotsman. com
» Edinburgh Solicitors Property Centre: 0044-0131 624 8000; www. espc. com
» Council of Mortgage Lenders: 0044-845 373 6771; www. cml. org. uk
» Royal Institution of Chartered Surveyors: 0044-870 333 1600; www. rics. org
» Landlord Mortgages: www. landlordmortgages. co. uk
» Edinburgh Tourist Board: 0044-1506 832 121; www. edinburgh. org