Hint: they all think it’s a load of tosh
London Mayor Sadiq Khan announced in September that he would be launching an investigation into foreign investment in the UK capital, particularly condemning wealthy buyers for using homes as “gold bricks for investment,” and pricing domestic buyers out of their own market.
While Khan’s intentions may well be honourable, one thing is clear when speaking to leaders in the UK property sphere – London needs foreign investment.
Here’s what three experts have told us:
Naomi Heaton – Founder and CEO of London Central Portfolio:
“What Sadiq Khan hasn’t really realised is that there are 2 parallel markets.
“Most foreign investors buy at a price point which is far beyond the price point of a domestic buyer, the average value of a property in London as a whole, is GBP500,000 (USD608,000) and the kind of properties that are being sold in the new builds particularly in central London are far in excess of that.
“Take Battersea, a two bedroom flat is being marketed at GBP1.7 million (USD2million) now. Any domestic buyer would be buying a house for a family with that money. Essentially the properties that the foreign investor buys are not the properties that most domestic buyers would buy. Most domestic buyers would prefer to be in old properties. We’re not a new build nation.
“So really, to blame foreign investors is a kind of political posturing, it’s an easy scapegoat for government and local authority failings who haven’t provided enough affordable housing for the domestic market.
“If he turns the tap off on the foreign investor what you’ll end up is a lot of unbought, unsold property which is no good for anybody else. You won’t then find its filled up with all these people you want to give homes to, because they’re not the right homes, the right homes haven’t been built.”
Alex Newall – Founder of Hanover Private Office:
“I don’t know what he thinks he’s going to find!
“The UK has always attracted foreign buyers, partly because of trading partners and historical links. For example, because of the old empire days in India there’s always been a link there, and now there’s an enormous amount of Indian money in London.
“London is an international city, and everyone knows there’s a lot of foreign investment in UK property. So surely an investigation into this will just teach us what we already know.
“Does he want a diverse society, which he himself has benefited from, or not?”
Peter Allen – Sales and Marketing Director of Stanhope Plc:
“I think it’s a lot of hot air to be honest. There’s no doubt that he has come into office, he’s looked at the market and decided he wants to try to change things.
“It’s a fact of London that no one likes – people tend to park money and barely use the property. But it has always been thus in London. It’s just the nature of a global city. If he thinks developers are suddenly going to turn their back on international buyers, then that’s a joke.
“On one hand he’s saying London is open for business globally, and on the other hand he’s making these ridiculous claims on the housing market – which just doesn’t add up, frankly.
“Sadiq’s a good guy, he’s rooted in London. The reality is we need to be building more affordable homes, but it’s not at the expense of trying to cripple the top end.”