According to a study carried out by the School of Management and Business at King’s College London, overseas money is having a profound effect on the price of property in the UK. The main areas impacted are the major cities – London, Manchester, Liverpool and Leeds. The study reveals that average prices have increased from £70,000 in 1999 to £215,000 in 2014! Around 20% of this price rise is due to foreign investment, therefore if we did not have this money coming into the market the average price would be £174,000.
Most foreign investment comes in at the top of the market, the most expensive properties, but will of course trickle down as these vendors use the money to buy on. Professor Filipa Sá, who was managing this study said: “One of the factors behind house price growth in countries such as the UK, Australia and Canada is demand from foreign investors. This study looks at data for the UK and argues that foreign investment had a significant and positive effect on house price growth in the last 15 years.”
Profession Sa found that a 1% rise in the volume of sale to overseas companies results in a 2.1% increase in house prices. This affect is causing local residents to be priced out of the market in areas which are popular with overseas investors.
The mayor of London, Sadiq Khan, requested for research into ownership of property in London, stating that “Londoners deserve to know the identity of those that own property in their city, and we have waited long enough for Government to fulfill its commitments”. The research found that foreign buyers own 3,600 of the 28,000 new homes built in London for ‘First Time Buyers’ between 2016 and 17.
The Government are now under pressure to crack down on the UK’s property ownership. Theresa May has called for any UK property owned by foreign ‘shell companies’ to be put under fire and the front-men of these anonymous companies to face huge fines and even up to two years in prison if they fail to name the true beneficial owners of the property.
Although, these new rules will not be actioned until 2021, giving the corrupt businesses “three more years to invest their stolen cash into London’s property market. If Theresa May is serious that these people and their money are not welcome in the UK, its time she put her money where her mouth is and puts and table this legislation immediately,” says Naomi Hurst, anti-corruption campaigner at Global Witness.