Worse to come for city centre flat investors

Permalink: Worse to come for city centre flat investors
by Gill Montia

Alastair Stewart, a housebuilding analyst with investment bank Dresdner Kleinwort, is predicting that the worst is yet to come for buy-to-let investors who have bought new-build city centre apartments.

This type of property has seen heavy price falls in the past 18 months and tenants are hard to find because of a shortage of urban dwellers within the rental price range.

Moreover, the properties were marketed on the back of lending that could, in some cases, be described as reckless, resulting in certain property developers and valuers facing accusations of fraud.

Only last week, the Financial Services Authority revealed that it is investigating more than 200 cases of mortgage fraud connected to new-build city centre flats.

Surveyors are now erring on the side of caution when valuing the flats, with values in some cities (notably Leeds) plunging.

At the same time, lenders are showing a marked reluctance to finance buy-to-let and owner occupier purchases of city centre flats.

Mr Stewart is warning that further price falls are only to be expected and if he is correct, the implications for even the wider housing market could be serious.