Dear Mayor of London – Don’t Cut Off Your Property Nose….

12.09.16

In his infinite wisdom, Sadiq Khan has vowed to stop new homes in the capital being syphoned off in copious quantities to foreign investors. On the surface, his aims are laudable; few would disagree with the need for a balanced market. In reality, however, restricting demand (from whatever source) is a sure-fire way to compromise the viability and deliverability of sustainable, smart-growth development in London.

The property industry has gamely signed up to the Mayor's 'London First' concordat for sales, which commits to giving Londoners first refusal on new homes in the capital, and it's an initiative that Abode2 wholeheartedly supports.

Life is never that cut and dried however. The simple truth of the matter is, that domestic demand is not, and will never likely be, strong enough to drive off-plan sales rates alone, so the key issue here is that quota measures (however well intended) to curtail ready and willing overseas buyers runs the risk of destroying the viability of much needed wider market affordable housing schemes - the development community works in volume not in rarefied construction bubbles.

Construction costs alone are increasing by around 7% per annum (largely dictated by labour and materials shortages), which makes supply scenarios challenging to say the least. Capping end-user demand will only exacerbate this situation. Instead, what is needed is a pro-business approach that embraces all investor levels; one that listens to the development community and the parameters that it works to. Then, and only then, will we truly address the supply challenge. Mr Khan - I hope you are listening.

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