Author: Cyril Richert
On Thursday 27th June, Simon Hughes (Bermondsey and Old Southwark, Liberal Democrat) had a debate in the parliament about foreign-owned properties.
It echoes our recent article about residential skyscrapers planned for Nine Elms where we said:
“Anyway, it is likely to be again more investors from Asia and Middle East, who are currently buying most of the new “luxury” property developments in London. You can just cross the river and visit Imperial Wharf to see the consequence of this politics, with some people claiming that they are the only one living on their floor, the remaining flats being owned by foreigners as “second home”. Most of the to-be-built-yet flats in Battersea Power Station have already been sold through a Singaporean agent.“
It looks like Simon Hughes read our article as that’s exactly what he said yesterday. Below are quotes from the most interesting debate where it seems that all parties (LibDems, labour and Conservatives) agreed (the read the full debate click HERE).
Simon Hughes (Bermondsey and Old Southwark, Liberal Democrat)
I want to talk about the problem first before suggesting some solutions, based on comments made to me once people knew the debate was happening and on documents that have been in the public domain or press in the past few days. Let me start with two e-mails that I received before the debate.
The first e-mail is from somebody in Battersea:
“Good to see someone at least talking about the housing crisis in London. As an architect, part of my job is designing apartments in central London that I know are being sold off plan to buyers in China. Sometimes whole developments are sold in a day, with Chinese buyers paying in cash. That is before they are ever offered to the UK market, but should they ever be offered they would only be affordable to barristers and traders, not middle income workers like myself. It infuriates me, as I am still in a share house after 7 years of being in London.”
To show the other side of the coin, let me cite a second e-mail that I received unprompted in the past couple of days, entitled “Housing developers targeting foreign buyers”. It states:
“I am British and live in Singapore. Even though I have a work permit, the Government put an extra high stamp duty on property, and also restrict me from renting out a property I buy for the first three years of ownership.
I gather that the first phase of the Battersea development was out-sold in Singapore with over 800 units going to Singaporeans.
Andy Slaughter (Hammersmith, Labour)
I congratulate the right hon. Gentleman on making pertinent and timely points that my constituents will recognise. Are not these properties being marketed abroad because of the type of property being built? High-value, high-rise properties are the ones being built and the fault lies with the planning authorities, the Mayor and some borough councils, such as my local one, which are giving permission for tens of thousands of the type of unit that appeals to Malaysian investors but is completely unaffordable to his constituents and mine?
The hon. Gentleman makes a good point. We do not always agree, but he makes a good point. Many of the properties that are being built are specifically built with the probability that they will be sold easily in the foreign market. These are not family houses; these properties are mainly flats, often studio, one-bedroom or two-bedroom flats—small flats—which will either be buy to rent, will be used occasionally by somebody from abroad who might come here a couple of times a year on business or will be just kept as an investment. There is evidence that a lot of these places have nobody in them at all; they are simply bought as an investment in this country and will be sold later at a higher price. I agree with the hon. Gentleman.
Central London, which for housing purposes often includes part of my borough and my constituency, is now an area where, according to the best figures, more than one third of all buyers are from overseas, and two thirds of all new-build property is sold to non-UK purchasers—a third of the total and two thirds of the new-build property. Over a third of properties are sold to companies from China and the Asia-Pacific region, more than one in 10 to buyers in the middle east and north Africa, and about 8% each to purchasers from western Europe, and to eastern Europe and the former Soviet states.
I should be grateful if the Government, over the next few weeks, commissioned up-to-date research, using the all the sources available, into the extent to which residential property acquired by individuals who are not domiciled or resident here or companies that are not registered here is: acquired for investment only and kept empty; occasionally used; occupied primarily by staff; a home other than the principal home; or rented out. If the information could be broken down by local authority and postcode, that would be helpful.
It is noticeable that Jane Ellison, MP for Battersea, did not participate to the debate, while her constituency was at the heart of most arguments!
You can also read the report, London for Sale? An assessment of the private housing market in London and the impact of growing overseas investment, by Andrew Heywood (visiting fellow, Smith Institute) examines latest trends in London’s private housing market and highlights the negative effects of the sharp rise in overseas investment.
The London Assembly had also a debate this year (March 2013) where it was said that “we need to avoid some areas of London becoming ‘ghost towns’ as houses are bought for solely for investment rather than to be used as homes“.