Shrinking buy-to-let market – what does this mean for property in Canary Wharf?

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  • The buy-to-let market is shrinking due to changes to landlord tax laws
  • This could lead to the reduction in available properties for renters in Canary Wharf and the rest of London

Why is the buy-to-let market shrinking?

The last eighteen months have seen a significant downturn in the buy-to-let market. Increases in stamp duty introduced in March 2016 have discouraged multi-property investors from buying, with borrowing figures now down by 23%.

Even established landlords have been penalised, with a steady series of adverse changes to their tax breaks and private landlords finding themselves worse off financially than before. By 2020, landlords will have to pay tax on rent before deductions for mortgage interest, meaning that landlords risk making a loss on their rents. This is having a dramatic effect on their business plans; recent research from the Residential Landlord Association shows one in five landlords is thinking of selling up within the next five years.

The Canary Wharf property market

There is a high demand for one and two bedroom rental properties in E14

The BTL downturn is likely to have a profound effect on the rental market, particularly in Canary Wharf. Canary Wharf’s property market is characterised by new build developments where units are bought as investment properties. There is a high demand for one and two bedroom rental properties in E14, with many young professionals renting for a few years before buying larger property further out of London and settling down.

Our estate agents at Henry Wiltshire’s Canary Wharf office are concerned for the rental market. “With the buy-to-let market shrinking, it will become more difficult to meet demand for property in E14. Rents could increase as landlords try to compensate for loss of tax breaks.”

Effect on new build property

The dip in the BTL market may also be a worry for developers. Hitherto, developers have put up new build, high rise developments of small flats and studios, many with residents’ gyms, cinemas and other facilities. This kind of development is perfect for the buy-to-let market, but the fall in BTL investment could mean less interest in their units, and the risk of them standing empty.

But landlords shouldn’t give up altogether. “Stamp duty and reduced tax reliefs have dented landlords’ financial plans,” say our agents. “However, some lenders have reduced interest rates on their BTL mortgages to encourage borrowing – we are even seeing mortgage price wars. It’s also significant that Canary Wharf has some of the highest demand for rental property in London so landlords are likely to see back-to-back tenancies, removing some of the risk from property investment.”

Buy and rent property in Canary Wharf

Henry Wiltshire has great links with private and corporate clients, letting many properties in Canary Wharf to ensure good returns for landlords and investors. For rental property in E14, contact the Canary Wharf team on 020 7001 9160.

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