With the problem that the UK has with housing at the moment, the market needs rebalancing to help people afford a home. With property also being bought for letting, it appears that foreign investors buying UK homes for letting could be causing some of the problems buyers are facing.
The government is said to be looking into this issue and could place restrictions on new homes being taken up by foreign investors. With no restrictions now, this could be an area that could boost housing affordability in the UK and hopefully make homes more available.
While these restrictions won’t block the sales completely, they may make the market more balanced for homeowners within the UK. With the problems that many potential UK homeowners have getting on the property ladder, this could be a positive move.
Looking into this problem, the Mayor of London, Sadiq Khan, conducted a study to see the impact on London. It found that out of 3,600 newly built homes in the capital between 2014 and 2016, only half were aimed at first-time buyers. This is a sign that things may need rebalancing.
Outside of London, it was found that there are similar problems with newly built apartments being snapped up for the letting market. It appears that the UK property market is popular with Asian investors.
The Mayor’s report found that six out of ten buyers overseas were from Asian countries. These included Hong Kong, Singapore, Malaysia, and China. While there is nothing particularly wrong with the investment being a positive thing, if buyers in the UK are being priced out of the market, it won’t help strengthen the property market or help first-time buyers buy a home.
With a lack of new homes, the government is pushing for more to be built. If there aren’t restrictions on the number of homes being sold for let, then the point of the homes being built in the first place is lost. Restricting foreign buyers from buying the houses for let may just give the boost that first-time buyers need.
If the restrictions were implemented, these would be used alongside the Help to Buy scheme to make homes more affordable for first-time buyers. With the ability to purchase a property with just a 5% deposit, and the Starter Home Initiative, hopefully, more buyers can be incentivised to get onto the property ladder.
What the government needs to do is find a balance so that investment from overseas is not lost but also that it does not overwhelm the people who are looking for a way to buy their first homes. Now just to see what restrictions will be put in place and their success.