Planning Resource has published an on-line article by Matthew White, Head of Planning, London, discussing the conclusions of the May 2017 report by the London School of Economics concerning the impact of overseas buyers on housing supply. For the Planning Resource article, please see here or contact us.
The LSE report finds that London attracts a significant amount of institutional investment from lenders and business globally, bringing forward development on major development sites faster and with more homes than would otherwise have been the case. Despite a perception that new homes bought by overseas investors are kept empty, the LSE found that in fact this is generally not the case. The LSE report says:
Developers estimated occupancy rates for individual schemes were generally up to 95%. There was almost no evidence of units being left entirely empty – certainly less than 1%. Units bought to be let out appear to have very high occupancy rates and indeed some are ‘over-occupied’ eg by students. However for those units bought as second homes, occupancy could be as little as a few weeks a year. Many such second home sales are to UK residents, not overseas buyers.
This will be of interest to developers who rely on overseas buyers to de-risk their projects. The issue is likely to remain contentious in some areas of London, but this research will be useful evidence in response to such concerns.
The report was commissioned by the GLA’s Homes for London team. Matthew was a member of the sub-group, led by Hugh Bullock of Gerald Eve, convened by the Homes for Londoners Board to investigate overseas investment and purchase in London’s residential property market, which made recommendations on possible policy responses to the issue. The Mayor has noted that he will respond to the report formally in due course.
For further information, please contact: