Mayor of London will restrict overseas buyers and give Londoners and UK-based buyers first dibs to secure new build homes.
Sadiq Khan has announced that lower-cost new build homes valued up to £350,000 will be offered exclusively to Londoners and UK-based buyers later this year.
The Mayor is working with the capital’s leading homebuilders about introducing a process for marketing to Londoners who live and work in the capital in the first month, then UK-based buyers.
After three months would they be offered to overseas investors and by restricting sales of new build homes, first time buyers and home movers should have the chance to buy.
Cheaper homes bought by overseas investors
Research commissioned by the Mayor showed that investment from around the world has an important role of starting housing developments in London.
It also revealed the startling fact that half of the new properties bought by overseas investors in London were for homes costing less than £500,000, ideally suited to first time buyers.
Homes under this price are also popular with buy-to-let landlords in the UK that are looking for affordable properties to help improve rental yields.
In the capital this price range included many home buyers accessing support to get on to the property ladder through the Help to Buy scheme.
Competition for these homes could mean it is easier for remortgage buyers to stay in your existing home and continue saving more for a bigger deposit.
Sadiq Khan, Mayor of London said, I was alarmed to discover that overseas buyers were focusing on the lower-cost end of new build homes where many were being sold long before Londoners even knew they were available.
Discussions with the leading homebuilders including Berkeley Homes, members of the Home Builders Federation (HBF) and the G15 London’s largest housing associations have agreed to offer first dibs to UK and London buyers.
Mayor asks for a level playing field
The Mayor sees offering new build homes exclusively to London’s first time buyers and home movers as an essential step, Ministers must tackle other barriers in the capital.
Mr Khan has urged the Chancellor Philip Hammond to introduce a 24 month guarantee for mortgage offers on new homes to create a level playing field for first time buyers next to cash buyers and investors.
The mortgage guarantee would also offer additional security and confidence for homebuilders that they can sell their homes.
Paul Hackett Chair of G15 said, as an open and thriving world city, London is hugely attractive to foreign investors and Londoners compete in what has become a global housing market in our own capital city.
Demand from overseas investors have contributed to the rise in property values in the capital to the benefit of London’s homeowners.
Higher values have enabled older equity release mortgage buyers in London to access wealth in their property for home improvements or holidays or even buy a more expensive home.
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