London mayor plans to restrict foreign ownership as thousands of properties sit empty
Sadiq Khan is planning to block foreign homebuyers from buying properties in London until they have been offered to British residents first.
“I want to help Londoners by looking at what measures I can offer to make sure they get first dibs on more new homes,” the London mayor told The Times.
The proposal, the first of its kind, would see new homes put on the market in three stages. First, they would be offered to Londoners, and then to British residents, before being made available for sale abroad.
The plans for what the newspaper describes as a “first dibs” policy follows research, commissioned by Khan, which found that, despite the assumption foreign buyers only purchase high-end property, “more than half of all new homes sold to overseas buyers were worth between £200,000 and £500,000”.
The research also found that overall, 13.2% of new-build homes across London are sold abroad, rising to 36% in the most expensive parts of the capital.
The same research found just 30% of foreign buyers were buying properties to use for somewhere to live. “A staggering 70% admitted their reason for purchase was investment,” reports the Daily Mail.
Khan told The Times: “With London in the grip of a housing crisis, it can’t be right that so many homes are left empty at a time when thousands of Londoners can’t find an affordable home.”
Developers argue that the biggest property schemes in the city “regularly rely on foreign investors buying homes before construction has even started, as this enables companies to finance later phases of their project”, says the newspaper.
Rob Perrins, chief executive of the Berkeley Group, said: “International customers have always been part of the London market. They buy early on and this kick-starts developments and helps to pay for the affordable homes and social infrastructure.”
But The Bow Group, a right-leaning think tank, backs the idea of restricting overseas investment. In a 2015 report, the group argued that “since demand for housing in a globalised world is essentially infinite, supply-side policies will have only a negligible impact on prices, and restrictions on foreign ownership are the only way to make homes affordable”.
News of the mayor’s plan emerged as it was revealed that not a single affordable home under City Hall’s control was built in ten London boroughs in the current financial year.
Khan’s target for City Hall-funded affordable homes is 90,000 by 2021, with a minimum of 12,500 for the 2017-18 financial year.
But new figures show that work began on just 2,221 affordable homes under City Hall programmes between April and December – “leaving an uphill battle to hit this year’s target”, says the London Evening Standard.