Recently, the Mayor of London criticised the chronic failures of Boris Johnson’s scheme that aimed to stop new homes in the capital being sold first off-plan to overseas investors.
“The previous mayor’s ‘Concordat’ is yet another housing failure we have inherited – a scheme that claimed to help Londoners get first dibs on new properties, but in reality did nothing to stop the problem of London homes being sold off-plan as gold bricks to overseas investors,” said Mr Khan.
“This is the same mayor who oversaw planning permissions being given with just 13% affordable housing last year.
“I am determined to give more Londoners ‘first dibs’ on more new and affordable housing, and have asked officers to bring forward a range of meaningful options to replace Boris Johnson’s failed [and] frankly embarrassing attempt.”
However, Mr Khan’s ideas have been criticised by development finance lenders.
"Now is not the time to be discouraging overseas investment in London, whether in real estate or any other asset class,” stated Bob Sturges, Head of PR and Communications at Fortwell Capital.
"While much of the current turmoil and concern regarding property, equities and the value of the pound might prove to be overdone, the mayor should focus in the short term on reassuring investors – whether foreign or domestic – that the capital is very much open for business and that its fundamentals as a great world city remain firmly in place.
"Signs are already emerging of nervous international investors diluting their involvement in UK property, switching instead to traditional 'safe havens' such as gold.”
Scott Marshall, Director at Roma Finance, also had reservations and felt that there was no single policy proposal that would be the silver bullet to solve the London housing crisis.
“Trying to legislate on who can buy a property and what it can be used for (locals to buy, or for landlords to rent out) is fraught with difficulties and many cities in the UK could make the same claim in their local area to alleviate housing shortages.
“However, there are still plenty of properties in need of refurbishment and by using bridging finance to acquire them to make them ready for use is still a viable option for property investors."
Bob agreed that delivering affordable housing was one of the biggest challenges facing Mr Khan, but ruled out the idea of incentivising property developers to sell to Londoners first.
“It should never be forgotten – though politicians frequently do – that governments and local authorities have no money of their own.
“What they spend derives from individuals and businesses creating wealth in the already hard-pressed private sector.
“Why, many would reasonably ask, should they be expected to subsidise people to live in central London when they themselves cannot afford to?”
Bob suggested a better way forward could be for the Greater London Authority (GLA) to float a property bond on the money markets.
“This would raise the capital for infrastructural investment in affordable housing, the debt (and principal) on which would be serviced by the income stream generated by rental income and the incremental sale of a proportion of the stock created.
"Whether the GLA has the power to float such a bond is something about which I must admit ignorance.
“But surely an entity of the size, scale and international importance of the GLA should be invested with such power in the 21st century?"