Only a fifth of newbuild homes in London are now being bought by British buyers - as residents say flats have 'lost their value'

Only a fifth of new-build homes in London are being bought by British buyers – with developers instead trying to sell more properties to investment funds.

The UK's buy-to-let market is slipping away as modern flats become unsellable through traditional channels, according to property data company Molior.

People in Britain bought just 589 new homes across the capital in the most recent quarter to June – equating to only one in five (21 per cent) of the total 2,792 sold.

The figure is significantly down from the 826 bought by UK buyers in the same quarter last year – which was nearly half (49 per cent) of the total 1,674 purchased.

The proportion of sales to foreign buyers has also fallen over the same period, but by a lesser amount – from 23 per cent or 384 in 2025, to 10 per cent or 284 this year.

But sales to companies have surged over that time – from 28 per cent or 463 in 2025, to 69 per cent or 1,919 this year – as developers now target corporations instead.

Individual buy-to-let investors once played a vital role in promoting developments of new-builds in towns and cities, purchasing the homes at the start of construction.

This gave UK developers the pre-sales they needed to secure finance and help start construction – but this successful dynamic has now all-but disappeared.

Bernard Chia, who lives in a new-build flat in Canary Wharf, said: 'They are building lots of flats but the price point is very boujee. They are still not dropping the price for local people'

Saheb Son, who also lives in a new-build flat in Canary Wharf, said it was 'pleasant', adding: 'There's certain types of people who buy up these properties to rent them or to sell them'

Buy-to-let investors no longer purchase new homes at scale because of a series of issues including higher taxes, stricter regulations and increased borrowing costs.

This has cut profit margins for landlords – with many selling properties they bought five to 15 years ago, often for 20 per cent below comparable new-build homes.

Molior cited Canary Wharf, where about 1,000 second-hand new-build flats are for sale – in a market which is suppressing prices and discouraging new development.

One of the east London area's new-build residents, Bernard Chia, told the Daily Mail this week: 'It is peaceful. Flats in general have lost their value, lost their taste.

'My girlfriend works for an architecture firm who designed one of the blocks and I think that's empty because the price is so high - £1million for a flat.

'There's quite a bit of Airbnb going on. There's one opposite my flat so I am always seeing new people coming in and out. The block next to me has fewer people.

'They are building lots of flats but the price point is very boujee. They are still not dropping the price for local people.'

He added that the couple were looking to move to a 'more residential' area in the suburbs which is suited for families, given they currently feel like they are living in a 'financial business district'.

New-build flats continue to be built in Canary Wharf despite the changing property market

Mr Chia added: 'I don't think anyone would want to live out their life here. We have delinquents who break in and go onto our roof. People also wear motorcycle helmets and pretend to be delivery drivers.' 

Another local resident, Hadar Rosaif, said: 'I bought my flat last year and the prices had gone well down. Now I hope they bounce back because I want to sell and move.

'Buy to let is definitely less popular around here. I bought my flat from an investor in Hong Kong who bought it and is selling.'

He said there were lots of flats coming up for sale from the Pan Peninsula residential development, many of which are owned by Singaporean and Hong Kong investors.

Mr Rosaif added: 'Back when I rented there my landlord owned like 12 studios. A lot of companies have been buying them all up for investment. Now I think they are starting to sell because of the new Renters' Rights Act.'

He continued: 'I've been living here for three years and community is getting better. I prefer it here because I'm a walking professional and don't have time for the community or catching up with neighbours.

'I go to work and come back, whenever I have free time I just go to the gym. But the community is not as prominent as it is in different London regions. Here is mostly working professionals who come into their flat like it's a hotel.'

Saheb Son, who also lives in a new-build flat in Canary Wharf, described his accommodation as 'pleasant and safe, especially for Asian people as there are so many'.

In Canary Wharf, new-build flats are still going up next to existing traditional properties

Construction in Canary Wharf, where about 1,000 second-hand new-build flats are for sale

He added: 'It's hard to leave this place. My wife is safe and I don't have to worry about her. Asian women can be exposed to dangers so it's good for me to live here. 

'It's quite pricey comparably. There's certain types of people who buy up these properties to rent them or to sell them.'

He said he rented from a 'big company', with many of the properties owned by Chinese people who 'just own them and want to rent them out - that's how they manage it for investment'.

Mr Son explained that 'ten or 15 years ago they promoted investment opportunities like this in China'.

He added: 'I don't know my neighbours. They change a lot. I have lots of Korean and Chinese friends here but they don't really have any communities. Who cares about construction? Everyone is so busy. Canary Wharf has settled into that vibe.'

Experts said changes to who is now buying new-builds was featuring in 'all major UK urban apartment markets' and the impact of any supply-side reforms would be muted while demand problems exist.

Tim Craine, the founder of Molior, said that developments in London are often big blocks of flats which take about three years to build.

He told the Daily Mail: 'These blocks need substantial banking funding and funders demand evidence that the homes will be sold. That evidence is needed at the start of the three years.

'This makes buy-to-let investors the natural buyers of London new homes because they are willing and able to buy near construction start. Owner occupiers are not willing and able to buy near construction start.'

Modern apartment blocks are commonplace in the Canary Wharf neighbourhood

Canary Wharf has a large number of new-build flats for sale, with more still being constructed

Mr Craine described how former chancellor George Osborne 'started a war on buy-to-let investors a decade ago', adding: 'The consequence is the disappearance of new housing development in London.'

He said the removal of buy-to-let demand means the 'removal of the ability to fund development' and therefore 'very little development happens'.

Experts have cited two policies from Mr Osborne for changing the market in 2016 – one being how he curbed the ability of landlords to claim mortgage interest relief.

The other was his announcement that a 3 per cent surcharge would be added to stamp duty bills for buy-to-let properties and second homes.

The stamp duty surcharge was then increased in 2024 to five percentage points by Rachel Reeves when she was chancellor; while Labour's Renters' Rights Act has also had a negative impact on the buy-to-let business model.

Molior said 33,000 private homes are being constructed across London – with 16 per cent of them being built by Berkeley Group; 5 per cent by London Square; and another 5 per cent by Vistry Group.

But it also pointed out that work has halted at one in five construction projects. Some 56 have been stopped in total, with gates padlocked – containing 3,913 partially-built homes – mostly because of rising construction costs.

The firm added that there are now 4,629 homes complete but unsold in London, which is the highest number it has ever seen. There are 13,770 homes under construction but unsold.