The importance of overseas buyers in underpinning increasing elements of the capital’s housing market and won support from an unlikely quarter - the principal London commentator of The Guardian.
Dave Hill, writing a piece following up a BBC programme on overseas investment in London housing, says Londoners themselves, Labour politicians and left-leaning journalists often blame rich foreigners for high housing prices in the capital.
However, Hill says this analysis merely encourages xenophobia and suggests there may be simple answers to what are in reality far more complicated issues.
He has been spurred to action by a report that investors from Hong Kong are shown purchasing off-plan homes - not in prime central London, but in Colindale in London’s outer Zone 4.
“Be careful what you wish for” Hill quotes on house builder as warning. “Because in the UK and in London in particular, they play a very vital role in underpinning every [housing] development.”
Hill says this reveals an uncomfortable truth about the relationship between big foreign money and Londoners on ordinary incomes looking for homes they can afford to rent or buy.
Hill says: “It is that in the absence of enough public money, the former [the overseas buyers] have long provided a lot of the cash that pays for the building of the latter. If they stop investing, the provision of ‘affordable’ housing starts getting more difficult. This shouldn’t come as a surprise: ‘Red’ Ken Livingstone worked it out 15 years ago.”
The Guardian writer also takes a swipe at those who suggest so-called ‘buy to leave’ is commonplace. He says: “[It] certainly occurs, but the extent of it is contested and hard to quantify. And why would you simply leave a brand new flat gathering dust when you can profit from letting it? London needs a growing stock of professionally-run new homes for private rent. Should we oppose foreigners supplying it?”
Hill says new London mayor Sadiq Khan is attempting to restrict off plan sales overseas in the hope of holding down prices and giving Londoners a better chance of buying new housing as it comes on stream.
“The worry is that fewer homes of every kind will end up getting built, although there have been hints that he might seek to channel more foreign finance into the kinds of housing London most needs more of. Wish [Khan] well with such endeavours - but don’t pretend that foreign investors are the cause of every problem or that, like it or not, they aren’t going to remain part of the solution.”