“We worry about lower demand from unlevered buyers and more selling from levered buy-to-let investors from April owing to changes in buy-to-let taxation, at a time when we are nearing the Brexit referendum.”
Although the longer-term picture looks healthier, “investment horizons tend to shorten when markets correct and we think it is no different this time around”.
Capco’s shares fell 0.75p to 331.5p.
Estate agents and industry experts are meanwhile braced for stormier weather in 2016. According to London Residential Research, sales of new-build flats in prime London markets like Kensington & Chelsea and Westminster were down 47% in 2015, while agents report flagging interest from investors.
Trevor Abrahmsohn, head of agent Glentree International, said: “Asian buyers — from Malaysia, Singapore, Hong Kong and China — are walking away from their commitments to buy properties in, for instance, east London and Nine Elms.
"The changes to buy-to-let tax is the ‘straw that broke the camel’s back’."
“They would rather lose 10% than complete the purchase and lose a lot more, even before the developments are complete. The changes to buy-to-let tax is the ‘straw that broke the camel’s back’.”
He added: “In pockets of London’s newly developed areas, where there is a lot of speculative development, the outcome could quickly turn nasty with buyers drying up, developers having to cut prices and investors dumping their newly acquired flats before construction of them has even finished.”
Riaan Kruger, from the Nine Elms office at Garton Jones said: “A number of global factors have contributed to the slowdown in demand. Not least of all the plummeting oil price, the Chinese economy, the collapse of the rouble and the strength of the pound.”
