UK & World News
Many New London Homes Offered Abroad First
One in ten newly-built homes across London is being marketed and offered to foreign buyers before being made available in the UK, Sky News can reveal.
Major developers have admitted giving wealthy individuals in countries such as China, Russia and Malaysia an advantage in the UK property market.
Critics say the trend has hiked up property prices, leaving locals with no chance to compete. The problem is particularly acute in London, where fears are mounting about a housing bubble.
Now eight of the country's biggest developers - responsible for 44% of all new-builds in London - are agreeing to stop the practice and level the playing field.
Companies including Barratt Developments, Crest Nicholson and Galliard Homes have signed a "voluntary commitment to ensure UK buyers have every opportunity to buy new-build homes in the capital".
But they are also calling on the Chancellor not to make any more interventions that could put off foreign investment in property. George Osborne used his Autumn statement to change the rules so foreign buyers will face capital gains tax on UK homes.
The agreement - seen by Sky News - was put together by the Home Builders Federation, who also carried out a survey of the companies revealing that 11% of properties had been marketed abroad first.
It also showed that 49% of new-builds in prime central London had been bought by foreign investors over the past two years.
But questions are arising about whether the agreement will make any difference.
In the survey, the developers admit to selling properties off-plan 21 months in advance, on average.
That means that even under the new commitment, people in Britain who are not cash buyers will be unable to compete because mortgages are only secured up to six months in advance.
The companies argue that the foreign investment has meant the property sector in London has held up through the recession. And they say the gains will help them to build 14,000 affordable homes for British buyers.
Stewart Baseley, Executive Chairman of the HBF, said: "Attracting up-front investment by pre-selling homes is absolutely key, and without it many developments would not go ahead.
"Selling some properties abroad allows tens of thousands of affordable homes as well as for rent and to buy, to be built for Londoners."
That, he said, would help ease an "acute housing crisis" in the capital.
But critics say major luxury developments are sprouting up across the capital that ordinary workers have no hope of ever purchasing.
They say wealthy foreigners are buying up the luxury flats and then leaving them empty. And they reject the claim that affordable housing is also being built.
Andy Slaughter, MP for Hammersmith and Fulham, said there were rows of new blocks emerging along the river Thames that were infuriating locals.
Many were advertised on websites in Russia and Hong Kong before even being made available in England. The sites mocked up the flats with images of swanky cars and beautiful people.
Mr Slaughter said the new commitment was "meaningless" because as long as the property was being aimed at wealthy investors abroad the prices would continue to rise.
"They are talking about building 50,000 new flats in the borough over the next 20 years and not one of those would be affordable to somebody on the London living wage. That is a disgrace."
Even so-called affordable housing could only be afforded by people at the top-end of the income scale, he added.
Local resident, Davina Judelson, said some of the properties were being marketed abroad for £1.5m.
"That is a price that no ordinary home buyer could afford. My children could not afford it," she said.
The Labour party said it was a "step in the right direction". But shadow housing minister Emma Reynolds said her party would go further tackling so-called "buy-to-leave" where properties are bought and left empty.
Housing minister Kris Hopkins said foreign investment had unlocked development and led to homes being built that wouldn't be otherwise.
He added: "But it is clearly in the interests of developers to ensure that their properties are available to both UK buyers and those abroad, so I welcome today's actions by the Home Builders Federation.
"And the changes we've made to the tax rules make sure overseas buyers pay their fair share."
The move was also welcomed by Richard Blakeway, deputy mayor for housing. But he said that while foreign investors were looking to London, they were not pushing out British buyers to the extent that was sometimes claimed.
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