Leading developers working in London have announced a new voluntary commitment to ensure UK buyers have every possible opportunity to buy new build homes in the capital.
Leading developers working in London have announced a new voluntary commitment to ensure UK buyers have every possible opportunity to buy new build homes in the capital.
It comes at a time when foreign buyers, particularly at the upper end of the market are buying large numbers of new homes amid concerns that they could be pricing British buyers out.
But now the Home Builders Federations says that developers who have signed up to the agreement are committed to selling to British buyers and the organisation pointed out that selling to foreigners helps developers to fund developments so should not be overly criticised. It points out that selling some homes abroad is leading to the construction of thousands of desperately needed new homes for Londoners and delivering significant benefits to the capital’s and wider UK economy.
Figures from a survey carried out by the HBF of eight large companies responsible for 44% of new homes built in London last year, show that as a result of developments being built, or about to be built, with homes sold abroad around 14,000 affordable homes are or will be built and more than £2 billion from abroad was invested into British based builders.
Also the government received an estimated £129 million in stamp duty, an average of £39,000 per transaction, and 16,000 jobs were created.
The survey results support previous research showing that 85% of properties bought by foreign buyers in Prime London were occupied with the figure considerable higher across the rest of the capital, so dispelling the lights out London myth that homes sold abroad are left unoccupied.
The research reveals that, on all but a few high end developments, when buyers aren’t actually living in the properties, they are renting them out, thus helping alleviate the shortage of rental property in London.
It points out that pre-selling a percentage of a development is often vital for financing developments. Without committed up front funding, proposed developments are not viable options and would not get built and London would lose the significant knock on benefits. But the industry is keen to ensure UK buyers have every opportunity to invest at an early stage.
To demonstrate its commitment to UK buyers, several HBF members operating in London have signed a commitment stating that from 01 January that all new developments will be marketed in the UK before or at least at the same time as abroad.
Whilst simultaneous or UK first marketing had applied to vast majority of developments, the survey found that developments that made up 11% of the new homes sold last year had been marketed abroad in advance of being actively promoted in the UK. This announcement will ensure that this will not happen again.
‘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,’ said Stewart Baseley, executive chairman of the HBF.
‘London has an acute housing crisis and foreign buyers are playing a vital part in helping increase the number of homes being built in the capital. However, the industry wants to ensure that UK buyers have every possible opportunity to buy the homes being built,’ he added.
The Mayor of London, Boris Johnson, said that boosting housing supply in London is vital and whilst overseas investment is a long standing and necessary part of any global cities housing market, it is important that homes are not exclusively marketed abroad before the UK.
‘I welcome the Home Builders Federation efforts to get developers to sign a code of practice to ensure domestic buyers are not disadvantaged and repeat my call to mortgage lenders to extend offer lengths to nine months. It is right that new homes are made available to Londoners at the outset. In addition it is critical we continue to make every effort to boost house building and deliver more homes to support economic growth, including low cost homes to rent and buy for hard working Londoners,’ he explained.
Housing Minister, Kris Hopkins, said that the London housing market has received valuable support from foreign investment, unlocking development and leading to the building of homes that wouldn’t otherwise happen.
‘But it’s clearly in the interests of developers to ensure that their properties are available to both UK buyers and those abroad, so I welcome actions by the Home Builders Federation. And the changes we’ve made to the tax rules make sure overseas buyers pay their fair share,’ he added.
Emma Reynolds, Labour’s Shadow Housing Minister, said that the voluntary commitment by a number of house builders to market homes before or at the same time as they are available for sale overseas is a step in the right direction.