It’s Official: Londoners Benefit From Foreign House Buyers
Overseas investment in residential property is beneficial for Londoners, according to a report commissioned by London Mayor Sadiq Khan.
The report, undertaken by the London School of Economics, pushes back on a lot of the accusations levelled at overseas buyers, such as the idea that they buy residential units then leave them empty, or that the vast majority of new-build homes are bought by foreign buyers.
It concludes that foreign buyers are vital to making sure new development happens, and global investors are funding the nascent built-to-rent sector.
“Overseas purchases do impose a cost on Londoners: on reasonable, conservative assumptions, Londoners are unable to access maybe 6% of private new-build units as either owners or tenants,” the report said.
“But this cost is more than offset by the positive impact of pre-sales on the speed and volume of new construction of both private and affordable new housing. In terms of the number of new homes built, Londoners therefore benefit from overseas buyers.”
The interest of foreign buyers in London is changing the type of housing developers try to build, according to the report, which did not try to asses the impact on pricing that overseas buyers might exert.
The key findings of the report were:
- Significant proportions, about 20%, of new units are bought by overseas residents. The percentage is highest in central London but the total number there is small.
- A clear majority — 70% — of units bought by overseas investors are let out to Londoners.
- Others are used by owners’ family members, children in education or returning expats, and are fully occupied.
- A small but highly visible subset is lived in only occasionally. However, there was almost no evidence of homes being left permanently empty.
- Pre-sales to overseas buyers enable developers to build faster and thus make more market and affordable housing available than would otherwise have been the case.
- International investment and finance have helped bring stalled sites into use and speed up development on larger sites. They have also been key to creating our build-to-rent sector.
When the report was launched in December last year, Khan said, “We welcome people from all countries who want to make the capital their home and we welcome international investment that can be crucial in kick-starting the building of new homes. At the same time, many Londoners have real concerns about new homes being left empty and the fact that this may be linked to those which are bought off-plan by overseas investors.”