Londoners demonstrating for homes, not profit. Photo Workers.
A reader of Workers responds to our article about London housing:
“The recent Workers article about housing in London was quite right to say that building more houses is no way to address London’s housing problems.
“However there was a significant omission as it did not address the role of foreign investors in contributing to the problem. According to a recent report in The Times almost 27 per cent of the total London properties sold in the first three months of 2024 were acquired by foreign buyers.
“Taken together with work by the London School of Economics which shows that for every 1 per cent increase in the share of residential transactions to foreign entities, the market witnesses a 2.1 per cent increase in house prices, it is clear that this is the first step which needs to be tackled.
“Ban these sales, or if not charge a significant tax.
“The simplest way to moderate prices for new homes would be to ban sales of London properties to buyers resident overseas. If the government would not consider a ban, why not impose a significant tax (say) 50 per cent? I suspect many would still be sold but all the revenue could be used for social housing.”
• Thanks to our reader for this response. The problem described is getting worse: ten years earlier, in 2014, around 7 per cent of residential property sales were to overseas buyers. These buyers may be in the market to rent out the properties, or to sell later at a higher price. Either way, the effect is detrimental for the domestic housing market – increasing prices and also taking rents or capital profits abroad.
In 2017 the Mayor of London, Sadiq Khan, commissioned a report about overseas investment in new housing builds. This provided much detailed information. Little apparent use has been made of it and no curbs on overseas owners have been applied. Khan’s overall record on housing has been much criticised.