Should the UK follow New Zealand and ban foreign buyers from purchasing properties?
Emily Horton, assistant political news editor at The London Student, says YES.
We should definitely consider the New Zealand strategy as an option, or at least imposing some restrictions on foreign buyers, particularly when it comes to ensuring that the houses which are bought are actually lived in. Vacant properties purchased by the super-rich are keeping prices up, and the average Londoner out.
The capital’s property market is simply unaffordable for the majority. For example, I’ve been living at home for the past three years, saving for a deposit and I’m still miles off where I need to be to fund a purchase. And it isn’t because I’ve been buying too much avocado toast.
Schemes like Help to Buy are great, but only if you are earning around £80,000 and have a five per cent deposit lying around. Most people my age trying to get onto the property ladder simply don’t have this.
Building new, affordable properties is a must – but will take time. So until then, any restrictions that can help curtail rocketing property prices should be considered.
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Mark Stephen, founder of Reditum Capital, says NO.
Foreign investment plays a crucial role in the UK. It benefits our property market significantly, and can support resolving the current housing shortage.
Support for bans may be strong, but it risks worsening the problems that need to be solved. Londoners are only unable to access around six per cent of private new builds because of foreign buyers. However, this number is more than offset by the positive impact pre-sales have on the market, both in construction volume and speed.
This willingness to assume risk and buy without seeing a project is a unique characteristic of foreign investors, and one that is essential in financing new build constructions. Domestic buyers are far more restrained by UK mortgage limitations, which are not designed for pre-construction purchases due to six-month completion date requirements.
Bigger issues like LTV restrictions and affordability tests further stifle this market, more so than mortgage rates themselves. Foreign investment is supplying crucial upfront finance to the UK construction market.