Buy-to-let new-build flats “almost unsellable”

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by Gill Montia

A gloomy forecast from Neil Woodford, a senior fund manager at investment house Invesco Perpetual, warns that buy-to-let investors with city centre new-build flats could face a torrid year ahead.

Mr Woodford believes that UK house prices are simply too high, and is forecasting a fall in values of between 8% and 10% by the end of the year, meaning that the price of the average home could drop £18,500.

He adds that the decline will be far higher in some regions and certain property sectors, with the biggest losers likely to be the owners of new-build flats aimed at buy-to-let investors. He goes on to describe these properties as “almost unsellable”.

Other respected housing commentators are more positive, with Capital Economics forecasting a fall of only five per cent this year.

Meanwhile Allsop, the residential auctioneer, has reported a sharp rise in the number of repossessed properties listed.

The firm’s February catalogue contains 410 residential lots, nearly 40% of which are being sold by banks or mortgage companies.

Gary Murphy, a partner at the firm, points out that a large proportion of the lots on offer are repossessed buy-to-let properties, commenting: “The buy-to-let market has attracted a whole new group of investors in the past 10 years, but many of them have not fully appreciated the pitfalls of property investment.”

He adds “We haven’t seen conditions like this since the early 1990s. At the same sale last year, less than 20% of residential properties offered were repossessions.”

Andrews & Robertson, another leading property auctioneer, has also reported a rise in repossessions.