Down in Docklands?
A rise in repossessions is casting a shadow over one of London’s property success stories, discovers Helen Davies
The regeneration of east London’s Docklands has been one of the capital’s great property success stories. Since the summer of 1981, developers have transformed crumbling wharves into yuppie loft apartments, and built steel and glass towers. There is even a three-storey Waitrose.
A quarter of a century later, buildings are still going up. But the area is not proving an unmitigated success for a number of buy-to-let investors, who have borrowed heavily in order to buy and are now struggling to keep up with mortgage payments and cover rental voids.
Adam Stackhouse, head of sales at Chesterton’s Tower Bridge office, estimates 25%-30% of properties on his books are repossessions, most originally bought by investors.
“They started to gather momentum 18 months ago and have grown steadily ever since,” he says. “Amateur buy-to-let investors who simply barnstormed into the market have found themselves in over their heads.”
Nor can those selling count on large capital gains. Savills Residential Research says the average value of flats “east of City” (which includes Wapping, Bermondsey, Limehouse and the Isle of Dogs) rose by just 2.2% between September 2002 and June 2006. With a further 24,000 units in the pipeline, future capital growth is likely to remain subdued.