Mark Prisk
Main Page: Mark Prisk (Conservative - Hertford and Stortford)Foreign-owned UK Property
Mark Prisk Excerpts
The Minister for Housing (Mr Mark Prisk)
I congratulate the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) on securing a debate on this important matter and on offering, as usual, a range of ideas. I received his shopping list—thankfully it was not confused with Mrs Prisk’s shopping list, which might have been awkward—and take it in exactly that vein, as a set of positive suggestions. It recognises some of the challenges, some of which I will seek to answer. I also undertake to reflect in detail on his list’s itemised elements, rather than seeking to do so in the remaining 11 minutes.
The right hon. Gentleman has a strong record of speaking eloquently and frequently about housing stress in London. I will preface my remarks by looking at the housing market as a whole and then focus on the question as it relates to London, because I think that is where the heart of the problem lies. For too long now, regardless of which party has been in government, our housing markets have been dysfunctional. From my political background, and my professional background as a surveyor, I think that this country has probably built only half the homes we need year on year for perhaps a generation.
As the right hon. Gentleman rightly said, that has caused a long-term housing shortage and, with it, significant social problems, and that is especially true in Greater London. That is why the coalition Government are determined to take a different approach. Our housing strategy seeks to be comprehensive and to address both supply and demand and both freehold and leasehold, and it seeks to start to reverse the loss of 421,000 affordable homes that, sadly, we saw under the previous Administration. It is why we are reforming the planning system to speed up the development process, why we are unlocking large sites to create lasting settlements, and why we are building over 170,000 more affordable homes. It is also why we are seeking to create a bigger and better private rented sector that gives tenants greater choice and quality.
At the same time, we are supporting demand for new homes through the Help to Buy equity loan scheme. Boosting demand matters, especially after the record lows of recent years. I believe that not just because I am a passionate supporter of home ownership, but because a rise in demand gives builders the confidence to accelerate building and can boost overall market supply, including of affordable homes. That is an important point about how the flow of cash and investment helps the market as a whole, a point I will return to in a moment.
On the specific question of foreign investment in housing, it is natural to look principally at London. We have to recognise that London, as the right hon. Gentleman correctly said, is a truly global city; perhaps it is the global city. It has not only the fastest growing economy and population in the UK, but immense international appeal. I think that Members on both sides of the House recognise that as a highly desirable position to be in.
London’s success is in part the result of our open and free markets. Being a global city brings many economic benefits, with wealth creation and inward investment in jobs. Only a week or so ago the Mayor announced the securing of £1 billion of Chinese investment in the area that used to be covered by the old London Docklands development corporation but is now an enterprise zone, which is a very welcome long-term investment. The preparedness of others to invest here is a vote of confidence both in this country’s current economic strategy—that of the coalition—and in London’s future. I think that that openness is also vital to the character of London. It is a diverse city with a fantastic range of influences and cultures, and that is something to be welcomed.
As a result of that, the housing market in London is quite different from the housing market across the rest of the country. Across the rest of the UK, domestic demand has suffered, with mortgage constraints and the difficulties builders have had in securing development finance, but in London the availability of foreign investment has kept development going. It has generated the cash flow that developers need to progress schemes.
The right hon. Gentleman mentioned research. A recent report by the Greater London authority looked at barriers to housing delivery. It estimated that in prime London markets—the very highest—up to 75% of buyers are from overseas, and across London as a whole approximately a third of buyers are foreign. The report goes on to note that
“construction activity demands investor sales—many, if not most, major London residential schemes only commence due to the expectation of the sale risk being mitigated by the chance to sell to UK-based and overseas investors.”
We should also pay attention to what developers say. Tony Pidgley of Berkeley Homes recently said that to try to curtail foreign investment sharply is unrealistic, because it is only through such funding that Berkeley and others can build more homes and affordable homes. Before turning to the specific matters raised by the right hon. Gentleman, I will quote Tony Pidgley, who says:
“Basically most sites that Berkeley are building are a third affordable, a third goes abroad, and a third to the UK market”.
He goes on to say that without foreign investors,
“London would be worse off and we would have fewer affordable homes and fewer private homes.”
I say to the right hon. Gentleman that I totally understand the sense of frustration and challenge that local authorities and, indeed, local people may feel about this issue, but if we seek to curtail inward investment in a crude or ill-defined way I think we can both agree that it would lead to a significant set of unintended consequences.
Simon Hughes
I will be brief, because I know the Minister has other things to say. A report that is about to be published will show that, sadly, the figure given by Tony Pidgley of a third is much lower in reality, both in London and across the UK. Although that may be the theoretical quota, in my borough the figure is much lower and I fear that nothing like that is being delivered, because, to be blunt, companies get more money out of having fewer affordable homes.
Mr Prisk
I am going to try to answer the points raised by the Member who secured the debate, if I may.
A number of people have said—indeed, it has been mentioned in this debate—that perhaps the majority of homes owned by foreigners lie empty. We have looked at the evidence carefully and Jones Lang LaSalle says that the vast majority of international buyers—85%—let property once purchased. There is, therefore, a benefit in that homes built in response to that demand often—in 85% of cases—go on to be let.
The right hon. Member for Bermondsey and Old Southwark also asked whether wider research could be commissioned for London in particular and, having looked at his shopping list, I can see that he also wants some granularity. He will understand that this is a devolved matter in London, but I will certainly bring this issue to the Mayor’s attention to see what granularity is available beyond the conventions of the English housing survey and so on.
Mr Prisk
I am running out of time and want to answer some of the questions asked by the right hon. Member for Bermondsey and Old Southwark, if I may.
The right hon. Gentleman raised the broader question of whether tax laws might differentiate in some ways. Property taxes such as stamp duty and land tax do not distinguish between UK and foreign nationals. That is partly because of EU laws, to which the right hon. Gentleman has alluded, but it is also partly because of significant administrative difficulties. Although he will understand that tax policy, as I am constantly reminded, is for the Treasury, I will nevertheless make sure that Treasury Ministers are aware of his suggestions and concerns.
The right hon. Gentleman also mentioned council tax differential rates, which we have discussed before. In April, having to listened to his concerns and those of others, we gave new powers to local authorities to establish an empty homes premium for long-term empty properties. Clearly, it is up to local councils how they do it, but I think that this is a power that is able to address many of the problems, perhaps in a simpler and more localised way than we thought. It is something that we will happily encourage, but as a localist Government we will not seek to impose it.
The right hon. Gentleman also mentioned foreign comparators. We certainly look at them, but we have to be careful to look not just at fiscal or planning arrangements but at the picture as a whole. Having looked at Hong Kong, I know that although it has made certain fiscal changes its difficulty is that prices are still rising.
I will respond to the right hon. Gentleman’s specific shopping list, but let me conclude by saying that I think there are perfectly understandable concerns about the potential impact of people from overseas buying homes in London. We should not, however, pretend that there are no benefits—I know that the right hon. Gentleman does not seek to do that. Inward investment has helped more homes to be built and it encourages confidence. We need a balance to be struck, but overall London benefits from being an open and diverse city, which both welcomes and, indeed, attracts investment from around the globe. I look forward to continuing this dialogue and to making sure that we continue to keep on top of what is a difficult and vexed issue that we hope to challenge.
Question put and agreed to.