Research reveals half of new properties are bought by overseas buyers
Today 5th February, the Mayor of London, Sadiq Khan, announced a landmark step towards offering ‘first dibs’ on new homes after the housing industry responded to his call for change with an offer to sell lower-cost new properties exclusively to Londoners and UK-based buyers first.
Following the Mayor’s discussions with the capital’s leading homebuilders about steps to make more new homes available to Londoners, he has now received offers from members of the Home Builders Federation (HBF) and the g15, which represents London’s largest housing associations, to restrict sales of all their new-build homes in the capital up to £350,000 to UK buyers only for three months before any overseas marketing can take place. The offer also involves Londoners, who live or work in the capital, being offered ‘first dibs’ exclusively for up to a month within this time period.
The offer from the industry is also backed by the capital’s biggest homebuilders, Berkeley Homes and represents the first time ever that sales from leading homebuilders have been restricted to UK and London buyers only. The previous Mayor’s efforts to strike a deal only secured promises around marketing, rather than sales, and suggested merely that homes should be marketed domestically ‘either first or at the same time’ as overseas.
The industry offer follows research the Mayor commissioned last year into the role of overseas investment in the capital’s property market. The research – the most extensive of its kind ever undertaken – set out the important role investment from around the world plays in getting housing developments in London underway. However, it also revealed the startling fact that half of new properties bought by overseas buyers in London were homes under £500,000 – typically the price range for many first-time buyers and those looking to access support through schemes such as ‘Help to Buy’.
By focusing their efforts on homes up to £350,000 – the lower-priced end of the private sales market – the industry offer helps secure ‘first dibs’ for Londoners on homes that are broadly affordable by households who would be eligible for affordable housing – those earning up to £90,000.
The Mayor of London, Sadiq Khan, said: “I am determined we take meaningful steps to help Londoners buy more new homes they can afford, and the offer from across the housing industry will mean we can move quickly to make this a reality for our city.
“Through the extensive research I commissioned, I was alarmed to discover that overseas buyers were focusing to such an extent on the lower-cost end of new-build homes – many of which were being sold long before Londoners even knew they were available.
“That is why I have been discussing steps with the capital’s leading homebuilders and I welcome their landmark offer to give Londoners ‘first dibs’ for up to a month on all their new homes under £350,000, with sales ringfenced to UK buyers for three months before they are marketed overseas.
“The industry offer is an important breakthrough – I will now work with them to put it into practice, whilst also being clear we need the government to help us go further, for instance by guaranteeing extended mortgage offers to put London’s first-time buyers on a level playing field with investors.”
Sadiq will now work with homebuilders to put their offer into action, including by potentially making homes available through his new ‘Homes for Londoners’ portal, currently under development on the City Hall website. By working with the voluntary offer – which is expected to expand to cover more homebuilders and housing associations in the near future – the Mayor aims to have ‘first dibs’ for Londoners up-and-running later this year, many years ahead of any measures that could be secured through the planning system.
The Mayor’s draft London Plan, published at the end of 2017, referenced his discussions with major homebuilders to make more new homes available to Londoners before anyone else. The draft plan sets out his intention to keep any such steps under review to ensure they deliver his objectives, with a commitment to monitor their effectiveness and to consider other measures if necessary.
The Mayor has also been clear that whilst offering homes to Londoners first is an essential step toward helping them buy more new homes built in the capital, Ministers need to tackle other barriers for first-time buyers in the capital’s housing market too. Sadiq wrote to the Chancellor, Philip Hammond, in October last year, urging the government to work with City Hall and mortgage lenders to introduce a guarantee for mortgage offers up to 24 months on new homes – an attempt to create a more level playing field between London’s first-time buyers and cash-buyers and investors, whilst also providing additional security and confidence for homebuilders.
Paul Hackett, Chair of g15 and CEO of Optivo, said: “As an open and thriving world city, London is hugely attractive to foreign investors. Although this has had many benefits in recent years, it’s also made it increasingly difficult for Londoners to compete in what has become a global housing market in our own capital city. As London’s largest housing associations, g15 support the Mayor’s ‘first dibs’ for Londoners initiative. We recognise the importance of prioritising ordinary Londoners, who otherwise would find it much harder to buy a home in the city in which they live and work.”
Helen Evans, Chief Executive of Network Homes, said: “G15’s primary objective is to help people who live and work in London access the housing they need. London’s leading housing associations are committed to building more genuinely affordable homes and that’s why we are fully behind the Mayor’s first dibs scheme on homes for sale to ensure Londoners get a short period of exclusivity on new-builds under £350,000 in the capital.”
Stewart Baseley, executive chairman of the Home Builders Federation said: “House builders are committed to helping Londoners realise their ambition of buying a home in the capital. London is a world city which presents a huge challenge for people wanting to purchase a property. The protocol will ensure UK based buyers are at the front of the queue and are first to get the opportunity to find and buy new homes being built.”