Allsop’s latest residential auction in London raised more than £67m, with a success rate of 75%, but buy-to-let investors in the auction room remained cautious as a result of recent tax and other legislative changes.
More than 300 properties were initially lotted by Allsop at the auction, which was held last Thursday at The Cumberland Hotel in Great Cumberland Place, making it one of the largest catalogues of the year. However, Gary Murphy, partner and auctioneer at Allsop, pointed out that buy-to-let investors responded by “exercising caution on the day”.
While the investment case for buy-to-let remains strong, the market is facing a number of challenges at the moment, including significant political uncertainty on the back of strained Brexit negotiations, and many landlords have been forced to re-evaluate their property portfolios and profit margins.
This has been compounded by the 3% stamp duty surcharge introduced in 2016, the phasing out of mortgage interest relief and tougher mortgage lending criteria hitting BTL investors with four or more properties.
Murphy said: “We are acutely aware of increasing caution in the market across many sectors.
“Both investors and developers are concerned about the country’s political future and speculation has given way to inaction.”
According to Murphy, investors are still keen on bricks and mortar, but only properties that are marketed at the correct price are achieving a good level of interest.
He added: “There’s a clear willingness to get on with business - but at the right price. Getting the reserves right has never been more important.”