Foreign housing market investment risks ‘racism’
Foreign investment in London’s housing market will fuel ‘xenophobia and racism’ if cash is not channelled into affordable homes, a report has argued.
London for sale?, a study from The Smith Institute and Future of London, finds overseas investors buying up luxury homes as assets have created a ‘financially buoyant but socially dysfunctional’ housing market that makes homes unaffordable for most people who live and work in the capital.
It argues the trend could create tensions within communities, and notes: ‘If this investment was being funnelled directly into the development of affordable housing for rent it would be viewed differently and rightly so.’
The study finds overseas investment in 2011 totalled £5.2 billion, more than the £4.5 billion the government is spending on affordable housing in the 2011-15 spending review period.
The report states its purpose is to ‘stimulate renewed debate’ rather than ‘promote a blueprint for a revised London housing strategy’, but it does suggest market intervention may be required.
‘The aim should not be simply to cut back overseas investment in housing,’ it says. ‘However the aim should be to ensure that such investment is not simply capitalising on rising asset values and that it bears costs that are proportionate to the financial benefits.
‘If such investment can be channelled directly into new development then so much the better.’
It adds that if more positive ways cannot be found to use foreign investment in housing then ‘measures to create disincentives for such investment may be inevitable’.