Brits want to restrict overseas purchasers to free up property for UK buyers

The rise of the global super rich buying up high-end property in London and other parts of the UK has been a feature of the top end of the property market over the last decade.

Restricting overseas property buyers is the second most popular request from the public in the results of the WhatHouse? survey.

Restricting overseas buyers is seen by many from all political persuasions as one of the central elements to helping resolve the UK’s housing crisis and to increase the number of affordable homes available to buy from people living in the UK.

One of the problems for people trying to buy a home is the massive amount of house price inflation seen since the mid 1990’s. For instance, a house in East Sussex that cost £87,500 in 1996 is now worth £375,000, an increase of more than four times. During the same period, the average wage of someone living in the area has not gone up by four times, or even two times.

This illustrates the affordability crisis that makes it so difficult for many households to make the leap from renting to buying.

In the mid 1990’s three elements came together that help to explain the huge increase in house price inflation seen since the mid 1990’s. There was a big rise in the population, an increase in buy-to-let lending and Russia and China entered the global economy, producing an elite that wanted a safe haven to invest in.

This has helped turn the UK’s property stock from a resource used to service the housing needs of the British population into a commodity used to satisfy investor demand, which has become divorced from the housing needs of British people.

It is estimated that foreign buyers now own 10% of the UK’s housing stock, increasingly in cities like Manchester and Edinburgh as well as London. This helps to raise prices across the market.

Other European countries such as Denmark and Switzerland have made it much more difficult for foreign buyers to purchase property in their countries as investment properties.

In Denmark non-EU nationals have to have lived in the country for at least five years before they can buy a property. In Australia there has also been a crackdown on foreign buyers after their purchases caused inflation in property prices in Sydney and Melbourne.

There are further concerns about the impact of foreign buyers on the UK property market. A minority of buyers are linked to organised crime and funds used to buy property are effectively money-laundering vehicles.

The new London Mayor, Sadiq Khan, has said he wants to introduce restrictions to stop London becoming the world’s capital of money laundering

Theresa May herself has said that tackling the housing crisis is one of her highest priorities

In a speech in Birmingham on Monday July 11, soon after she became Prime Minister she said: “Unless we deal with the housing deficit, we will see house prices keep on rising. Young people will find it even harder to afford their own home. The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing instead of more productive investments that generate more economic growth.” 

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