Deutsche Bank has issued a dire warning about the buy to let market in the UK, along with a broadside warning of a further slump in London’s housing landscape.
Weekend news outlets were brimming with stories of the bank’s latest warning that the tax changes introduced by Chancellor George Osborne against the private rental sector could deliver what it called a “major shock” to the wider housing market - with possible price falls of up to 20 per cent in the worst scenario.
Deutsche Bank says investors could expect returns to fall to as little as 0.0 or 0.5 per cent, and it warns that it is possible as many as 35 per cent of landlords in London could sell.
Oliver Reiff, co-author of the bank’s report on the UK housing market, is quoted in the Daily Mail as saying: “You also have to bear in mind that because of new mortgage regulations in the pipeline, many landlords may not be able to take out as much debt as before. This is likely to see fewer landlords buying properties, which will be a shock to the London market.”
Deutsche Bank is also warning about the forthcoming pipeline of homes at the large Earls Court development, which it warns could be the major casualty of a slump in London.
Reiff is quoted in the London Evening Standard as saying he expects prices for flats at Earls Court to fall by 20 per cent over the next three years, and for the scheme as a whole to lose as much as 65 per cent of its overall value.
Deutsche Bank is itself in financial trouble, contracting its global presence and shedding 35,000 jobs worldwide.