Boris caught in crossfire over London housing 'bubble'

Friday 15th March 2013

London Mayor Boris Johnson has been told in no uncertain terms to butt out of the property market.

Property developers said he should not interfere – in direct contradiction to a call this week by the London Assembly for the Mayor to research the impact that overseas investment is having on the London housing market.

The Assembly suggested that foreign money is creating a ‘bubble’, and also called on the Mayor to examine the extent to which properties owned by foreign investors are kept empty or unused.

Caroline Pidgeon, who proposed the motion, said: “There is a real risk that overseas investment is creating an artificial housing bubble, inflating prices beyond the means of most.

“It’s vital more Londoners aren’t locked out of the capital, their chances of being able purchase their own homes decreasing year on year as prices are pushed sky high. We need to understand the effect overseas investment is having on the housing market, especially in terms of price, affordable housing and supply of homes for Londoners.

“This motion isn’t about penalising investment in London – it simply seeks assurance that the Mayor will take a strong look at the impact to ensure it will not damage neighbourhoods or price more residents out of the capital.”

Tom Copley, who seconded the motion, voiced his concerns. He said: “The capital is in desperate need of new housing, and we need to avoid some areas of London becoming ‘ghost towns’ as houses are bought for solely for investment rather than to be used as homes. We need to get away from looking at houses as assets and see them as homes instead.”

But property businesses warned Johnson off, saying that any interference could unsettle investors and put new financing for homes at risk.

Scott Hammond, executive director at Essential Living, a build-to-rent developer which has backing from a US pensions fund, said: “Policy makers rightfully want to encourage new housing investment, but it’s vital we refrain from tampering with the market as this provokes uncertainty which is a huge barrier for large funds and institutional investors.

“Councils already have the power to determine what gets built in the area and we would suggest that a greater focus needs to be given to private rented homes to cater for the needs of professional Londoners and families.”

John Hitchcox, the London entrepreneur who co-founded Yoo with Philippe Starck, said: “The current witch-hunt against prime housing through sky-high Stamp Duty and moves to block foreign buyers makes no sense.

“Many high-value buyers from abroad bring huge amounts of business with them and contribute hugely to the fabric of London. It makes no sense to determine who can buy a home based on where they originate from.”