British homes for British buyers
In Chris Philp MP’s recent report on the housing crisis for the Centre for Policy Studies, he includes a suggestion of reserving half of new build homes for British nationals to stop foreigners buying them. The cap on developments of more than 20 units is one of the changes proposed by Croydon South MP Chris Philp to boost house-building towards the Government’s target of 300,000 a year – and ensure more new homes go to first-time buyers. Mr Philp references a development in London where 87% of 2,999 apartments were sold abroad, and a development in Manchester where 94% of 230 apartments went to foreign nationals, including half to a company based in the British Virgin Islands.
With the current housing shortage for first time buyers, the fact that cheap new build flats are being bought by international buyers off-plan, long before British buyers have a chance to look at them, is a tragedy, says the report:
“By snapping up new-build stock off-plan – including cheaper flats that are ideal for first-time buyers – non-UK buyers are preventing young Britons getting on to the housing ladder”
Suggestions that the government should not intervene in free markets “do not hold water” when it comes to property, he argues, for three reasons:
“First, housing is far from a free market. The planning system means that the state plays a significant role in shaping its outcomes. Second, land is not like other goods. You can always make more iPhones. You cannot create more land. Third, home ownership is so economically and socially advantageous there is an imperative for Government to support it.”
Britain would not be the first western country to impose restrictions on foreign buyers purchasing property. Switzerland, Denmark, Australia, Singapore, and New Zealand all limit or ban non-resident property buyers in some way. Closer to home, the Channel Islands have stringent laws protecting their property market, including different rates for domestic and foreign buyers.
Philp’s suggestions are good ones, but they do not go far enough. They should not be limited to new homes. Vast swathes of London feel like the Marie Celeste as a result of the houses being owned by foreign nationals who have no intention of living in them. Walk through Kensington & Chelsea at night and you won’t think that there’s a housing crisis at all – for so many of the properties are empty (in 2016 there were 1,652 registered empty homes in the borough). Owned by foreign nationals as investment opportunities, the cost of these properties (which only foreigners can afford) force up the price of all properties in the city, having a knock-on effect for poorer and first-time buyers. Freehold-owning family estates and private vendors have an obligation to ensure British people are getting prioritised, if for no other reason than to ensure their properties are actually being lived in. Noblesse oblige might be an outdated concept in a meritocratic world, but it should still apply to those fortunate enough to own property today.