The London housing market is at the top of the agenda for the London Mayor. Not surprising therefore that his review of the London Plan has specific focus on affordable housing and, in September 2016, he launched an inquiry into the impact of foreign investment in the capital’s housing market.
With an increasing number of Londoners living in the private rented sector and rents rising by 20% for the last five years, it is no wonder that this has led to a housing crisis. The London Mayor recognises that building enough new homes and catering to the needs of all Londoners is extremely challenging. Nonetheless, he has set himself a London‑wide target of 50% of new homes built in London to be affordable and he will be targeting this through his pro-development London Plan policies and through other measures such as the London Living Rent, more shared ownership properties, increasing funding sources, developer contributions, investment made by housing associations and Government, and the use of public land.
The Mayor wants to improve the services provided by the private rented sector by introducing licensing schemes for landlords, to support smaller house builders and new development models such as “build-to-rent” by using City Hall’s procurement power and introducing planning policies that promotes smaller sites.
The Mayor admits that globalisation has been good for London but his aim is to work towards a city that works for all Londoners. His aim is to have more transparency in foreign ownership of residential properties around the capital and to develop a more thorough understanding of the appropriate policies that could be put in place.
Inquiry into foreign ownership of residential property
In September 2016, the London Mayor launched an inquiry into the impact of foreign investment in the London housing market and this was shortly followed by a House of Commons Briefing Paper (on 3 October 2016) which considers the extent to which foreign ownership of residential property should be considered an issue for the UK housing market.
The inquiry, although not the first of its kind (a report was produced by the Bow Group “Solving the UK housing crisis” in November 2015 and the Smith Institute carried out a similar review in 2013) promises to be one of the most comprehensive research into the impact of foreign investment ploughed into the capital’s property market. Foreign investment is seen as a key catalyst to property building in the UK with London sharing its title as a property “hotspot” with Manchester, Liverpool and Birmingham. However, foreign investment is viewed by some critics as a major contributor to spiralling housing crisis forcing people to move out of the capital.
The purpose of the review is to address concerns about rising housing costs, the scale of gentrification in the capital and to consider what steps can be taken to strike a balance between supporting development but at the same time to help Londoners find a home. One of the key drivers for the enquiry is that the UK has no restrictions on foreign ownership of residential property. The London Mayor will be looking at countries such as Australia and Switzerland where foreign investors require prior approval before purchasing residential properties and (in the case of Switzerland) restricts the number of properties available to non-residents per annum. Likewise, in Denmark non-resident investors require prior permission from the Ministry of Justice whilst in Canada, Singapore and Hong Kong, foreign buyers are required to pay an additional 15% in stamp duty.
The Mayor’s powers are limited but ambitions are big. It remains to be seen whether he will be introducing similar measures in the new London Plan.