The United Kingdom’s Housing Minister Mark Prisk has – finally – rejected calls to curb foreign ownership of London new builds, after apparently being sympathetic to the idea.
The Minister’s spokesman confirmed the news in a message to asset management company London Central Portfolio (LCP), saying there were: “… no plans to do anything that would curtail inward investment, including restricting the market to the U.K. or giving local residents priorities for sales”.
The comments were in response to a campaign by high-profile London Member of Parliament Simon Hughes to prevent foreign investors from buying new London properties. The campaign led by Hughes, of junior coalition partner the Liberal Democrats, had been gaining momentum.
“Too many of the homes which are being built are now snapped up by wealthy individuals and companies abroad, often as investment properties,” said Hughes, proposing that the law be changed so that: “housing in London can only be bought by people or companies resident or domiciled in the UK, unless it is as a permanent home or they have express permission from the Mayor of London. We must stop this extra upward pressure on London’s housing costs as soon as possible.”
When the matter was debated in the U.K. Parliament at Westminster, Hughes also suggested using the tax system to deter foreign investors. At the time, Housing Minister Prisk (pictured) replied: “I totally understand the sense of frustration and challenge that local authorities and, indeed, local people may feel about this issue, but if we seek to curtail inward investment in a crude or ill-defined way I think we can both agree that it would lead to a significant set of unintended consequences.”
This equivocal response prompted LCP to accuse Government ministers of sending “… an outdated, xenophobic message”, with consequences to foreign investment that could cost the economy up to £5.6 billion.
“The price of older properties would also have to take a haircut to remain competitive with new-builds,” said Naomi Heaton, Chief Executive of LCP.
“In a repeat of the 1980s crash, this would result in widespread negative equity with devastating consequences when base rates inevitably increase.”
“With buy-to-let investors snapping up 44 percent of London developments, according to LCP, the private rented sector fulfils an important requirement within the City. It provides housing for international students, foreign visitors and corporate executives, all sectors the government is actively promoting.”
LCP welcomed Mark Prisk’s firm response and told the OPP Connect website: “We understand that there is a housing crisis, but you cannot solve that without looking at the economic factors. With these kinds of sound bites Simon Hughes clearly thinks he can win votes, but according to our research the private rented sector is one of our biggest exports.”
This story was first publish by OPP Connect and is reproduced as part of an editorial partnership between OPP Connect and PropertyGuru Group.
Go ahead for Melbourne Docklands renewal
Iskandar bungalow lots sold out
Uncertainty raised over foreign property ownership in Indonesia