The Mayor of London has announced plans to give locals and UK-based homebuyers ‘first dibs’ on new-build homes in the capital priced at up to £350,000.
Following speculation last week, Sadiq Khan this morning confirmed such properties will be offered for sale exclusively to Londoners and UK-based buyers for the first three months when they arrive on the market.
And those living and working in London will be given priority for the first month of that three-month period.
First dibs: Londoners will be given first chance to buy new homes worth up to £350,000 as builders will voluntarily refrain from marketing them to overseas buyers for three months
While the start date of the new initiative is yet to be confirmed, it is expected to be at some point during the summer, the Mayor’s office told This is Money and MailOnline.
Mayor Khan has has given a list of builders that will be part of the scheme.
Members of the Home Builders Federation, the g15, which represents London’s largest housing associations, and Berkeley Homes – the capital’s biggest housebuilder – have offered to restrict sales of all their new-build homes in the capital up to £350,000 to UK buyers for three months before they are marketed overseas.
The initiative is the first time ever sales from homebuilders have been restricted to UK and London buyers only.
Khan’s announcement highlighted the fact the previous Mayor’s – Boris Johnson’s – efforts to strike a deal ‘only secured promises around marketing, rather than sales, and suggested merely that homes should be marketed domestically “either first or at the same time” as overseas.
Last year, Mayor Khan’s office commissioned research that found half of new properties bought by overseas buyers in London were homes under £500,000, which, it stated, was ‘typically the price range for many first-time buyers and those looking to access support through schemes such as Help to Buy’.
The same research also found that 50 per cent of affordable new homes – priced between £200,000 and £500,000 – were sold to overseas buyers.
And analysis from the London School of Economics and York University found 70 per cent of buyers said the homes were solely for investment.
The announcement explained why the cap had been set at that level: ‘By focusing their efforts on homes up to £350,000 – the lower-priced end of the private sales market – the industry offer helps secure ‘first dibs’ for Londoners on homes that are broadly affordable by households who would be eligible for affordable housing – those earning up to £90,000.’
However, when the Mayor announced the restrictions on Twitter this morning, critics were quick to comment on the shortfall in property value compared to the popular government schemes to help first-timers save towards a deposit or help secure a mortgage for homes in the capital up to £600,000.
The Help to Buy Isa is available for those aiming to buy London homes priced at up to £450,000, and the equity loan guarantee part of the Help to Buy Scheme is available on London new builds priced at up to £600,000.
Is £350k enough? Critics were quick to point out the difference in maximum value of the Mayor’s scheme compared to the government’s Help to Buy Scheme
But housing experts have welcomed the new initiative from the Mayor’s office. Dr Alla Koblyakova, expert in property finance and investment at Nottingham Trent University, said: ‘This is really a very helpful and useful measure. It will help the Government’s distribution of housing to those that really need it that much more efficient.
‘Equal distribution of an economy’s resources to different groups of society id the purpose of every government.
‘This will also help social mobility, as it will help those on modest incomes own homes.’
She added: ‘Studies have shown that supply of new housing alone isn’t enough to help people get on the property market. In London, where prices are high, demand is significant enough that prices are relatively inelastic to greater supply.’
Dr Koblyakova also believes that the three-month period on the restriction of sales makes sense from a market perspective too.
‘Three months is nothing when considering whether the move could adversely affect the wider property market,’ she explained. ‘Research has shown such measures have to be in place for at least a year before they have any impact in that regard.’
However, other experts are more skeptical of the scheme’s merits.
Simon Tollit, director of London estate agency Tedworth Property, said: ‘A number of developers who are household names have signed up to the Mayor’s new initiative and while this is a headline-grabbing gesture, with the theory being that many domestic buyers and hardworking people in London (and the UK) will now be given the chance to own their own homes, it should be noted that it is exactly that – a gesture.
‘There are so few properties available for sale in new developments in London that will qualify, one must wonder whether it will make any meaningful difference whatsoever.’
He added: ‘In addition, with many new-builds being launched years before completion, and with the Help to Buy initiative only be valid for properties that are within a set period of completion, again, I would question how useful this will be for those looking to buy through the initiative.’
The Mayor of London, Sadiq Khan, said: ‘I am determined we take meaningful steps to help Londoners buy more new homes they can afford, and the offer from across the housing industry will mean we can move quickly to make this a reality for our city.’
He added: ‘The industry offer is an important breakthrough – I will now work with them to put it into practice, whilst also being clear we need the government to help us go further, for instance by guaranteeing extended mortgage offers to put London’s first-time buyers on a level playing field with investors.’
