Foreign investment is being blamed for contributing towards a “housing bubble” in London. I was asked, while speaking at a conference last week, whether the planning system could be used to dampen the ardour of foreign buyers inflating the value of London’s property market by restricting the sale of new market units to UK residents.
Aside from the fact that we have laws which seek to police and prevent discrimination (of which such a restriction would normally fall foul), this is not an inherent UK “problem” but rather a London-centric one. How well does this sit with the active promotion of the UK by the Government for foreign investment?
If local authorities are intent on introducing a restriction, there will need to be justifiable and evidenced planning reasons for doing so, ideally enshrined in a local policy. The policy will have to be justified, for example, on the basis that the local housing market is not meeting the needs of local residents. Possible means of addressing this may be to require new development to be marketed locally for a prescribed period, or, more restrictively, require a certain percentage of units to only be made available (both of first sale and re-sale) to local residents but with cascade provisions allowing others with local connections to buy units if there is not enough local interest. However, I question how easy such a restriction would be to monitor and control.
The fact is that foreign investment in residential property, even if largely within London for the time being, provides wider regenerative benefits for the UK as a whole in contributing to economic growth via the creation of new jobs, new homes and infrastructure. Is this not what good planning should achieve? Whilst the UK is still coping with the effects of austerity, any investment, whether national or international, should be welcomed unless there is a very clear harm which can be “planned away”.
As Lord Rogers recently noted there is a separate issue about houses being bought but not occupied. Care is needed not to confuse the two points.