The government has been urged to consider a New Zealand-style approach to housing after its parliament banned foreign investment to make properties more affordable.
Lynda Clark, editor of First Time Buyer Magazine, said a move of this nature in the UK would definitely offer an advantage to many of our own first time buyers who face considerable pressure when buying property.
Speaking to The London Economic she said: “This is probably more relevant in major cities like in London and Manchester where overseas investors are to be able to bulk-buy apartments, meaning that many first timers who actually want to live there, don’t stand a chance”.
According to Land Registry data 97,000 properties in England and Wales are held by overseas firms as of January 2018, a quarter of them owned by entities registered in the British Virgin Islands (BVI). Nearly half of all foreign-owned properties are in London, with the considerable level of foreign ownership giving rise to suspicions that it is used to launder the proceeds of government or business corruption abroad.
Research for London mayor, Sadiq Khan, showed foreign investors are buying up thousands of homes suitable for first-time buyers in London, using them as buy-to-let investments and often holding them in offshore tax havens.
Led by investors from Hong Kong and Singapore, foreign buyers snapped up 3,600 of London’s 28,000 newly built homes between 2014 and 2016. About half of those were priced for first-time buyers between £200,000 and £500,000.
Although overseas investment in New Zealand only accounts for 3 per cent of the entire market, Clark says any measures to promote home ownership for homeowners is “most certainly a positive step and not only opens doors to new opportunities but also demonstrates a gesture of support towards those struggling to buy their first home”.
With New Zealand facing the same kind of housing affordability crisis as London, where home ownership is out of reach for many, demands for the government to adopt a similar approach are likely to grow.
A report by the National Housing Federation found Londoners need a 283 per cent pay increase to afford to buy a home in the capital, with average prices more than double the figure for the rest of the UK.
Even in the most affordable area, Barking and Dagenham, the average income is half of the £68,448 needed to get a mortgage. Something surely has to give in order to beat generation rent in the capital.