Overseas Property Investors Face Regulation In The London Market
London’s recently elected mayor has made his mark early by going for some headline grabbing policies, not least of which is his decision to regulate overseas property investment in the capital. Sadiq Khan has promised to introduce restrictions on property sales in London in order to prevent the city from becoming the money laundering capital of the world.
The new rules are going to be aimed squarely at overseas investors, limiting the amount of homes that they can buy up and potentially leave empty. The move is sure to be welcomed by housing campaigners across the capital who constantly bemoan the practice, but the question over how it will affect the property market in and around London still remains.
London Is More Than Just Zone One
Much of the Greater London area’s property dealings are fuelled by Central London investment. Having regular buyers for property inside the heart of the capital allows those who sell to move further afield to places such as Essex, Kent, Middlesex and Surrey. This, in turn, boosts the property market locally for these areas, creating more wealth and prosperity in regions that were once considered secondary to Central London.
Mr Khan is unapologetic about the announced changes, however, stating that he is doing what Londoners want him to do – giving them the first chance to buy property in their own city. While this may seem like a worthy ideal on the surface, where exactly will the money come from for ordinary Londoners to be able to move freely within areas such as Knightsbridge, Notting Hill, Bloomsbury and the like?
An Unenviable Task
The mayor has his work cut out when it comes to solving London’s housing crisis and his job is certainly an unenviable one, but will stemming the flow of overseas money into London really prove to be the answer? Mr Khan claimed in a recent interview to have “nothing against luxury property” when asked if he wished to bring a halt to the oligarch property boom in London. However, he went on to add, “What we can't have is London being the world's capital for money laundering."
He also gave a hint of more affordable housing to be built within the M25, but no concrete promises of what will actually come to pass while he is in office. The mayor stated that those inside City Hall “shouldn’t be embarrassed of saying we need to build homes for Londoners”, giving the impression that he agrees more needs to be done to address the housing crisis, but with no evidence as to how this is going to happen.
Interesting Times Ahead
No one can argue that empty property is good for the capital or its inhabitants, but are restrictive new rules and red tape really going to make any difference to those who need the most help? It seems unlikely, and the point remains that by having regular, reliable investment from overseas coming into the capital’s property market, housing supply is able to increase – including at the affordable home level.
The next six months will be interesting to observe and with a potential Brexit on the horizon, too, who knows what will happen to the property market in London during Mr Khan’s tenure.
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