The Department does not collect information on the number of foreign buyers of new build properties.

However, publicly available research has looked at the influence ‘international buyers’ have in the new build market in London. Savills suggest of an estimated 97,000 Greater London sales in 2012 (which includes existing property), only 750 were “prime new build sales to international second home buyers”. An estimated 3,000 were for investment in lettings, and therefore available to UK residents as tenants.

(http://pdf.euro.savills.co.uk/residential---other/spot-worldlondon-lr.pdf)

Knight Frank (October 2013) found that between 85 and 90 per cent of new build purchases in Greater London over the last two years went to UK residents. They note that “Our research points to the fact that the majority of demand for new-build property in London from overseas remains focussed on the relatively small and concentrated market made up of the central London postcodes.”

(http://resources.knightfrank.com/GetResearchResource.ashx?versionid=2017&type=1)

I would also refer the noble Lord to my reply to him of 1 April 2014, Official Report, columns WA179-180.

No. The Government has no plans to establish a state limit on the number of new build properties that foreign investors can buy.

Following the last Administration’s recession, foreign investment in new housing has been helping to provide the finance needed to build it, particularly in a global city like London. Without upfront investment, financiers would not have released the cash needed for development to go ahead, and building would have stalled. These new developments not only provide homes for people to live and work, they also unlock associated affordable housing development. Even where property is foreign-owned, much of it is rented out, generating an ongoing return for the investor.

A good example is the Battersea Power Station redevelopment which, having laid derelict for thirty years, is now being taken forward thanks to the combination of private investment from Malaysia and public infrastructure support from the UK Government. Both were essential to move the project forward.

The Bank of England recently estimated that foreign buyers represent just 3% of total residential property transactions in London (Bank of England, Financial Stability Report, November 2013). Knight Frank have estimated that between 85% and 90% of new-build sales in Greater London are sold to domestic buyers, and there is no indication of a shift towards higher

non-resident purchases in the last two years (Knight Frank, International Buyers in London, October 2013). Savills have reported that the proportion of sales to overseas buyers in ‘prime’ London markets is no higher than it was in 1990. But they also estimate that, in 2012, foreign investment helped to finance 3,000 new affordable homes and added a further 3,000 much needed new homes to the market-rented sector (Savills, Spotlight: The World in London, 2013).

I would observe that the noble Lord’s suggestion would be illegal within the European Economic Area, as the free movement of capital is at the heart of the Single Market, and explicitly includes foreign direct investment and real estate investment. Short of withdrawal from the European Union, it would be perverse to allow foreign investment in housing from, say, Bulgaria or Greece, but prohibit it from Commonwealth countries such as Australia, Canada or India.

Of course, it is important that overseas owners of property pay their way. That is why this Government has taken action to tackle tax avoidance by reforming taxation of higher-value UK residential property held by non-natural persons, and also levelling the playing field by introducing capital gains tax on future gains made by non-residents disposing of UK residential property. Last month’s Budget took further steps to discourage the use of corporate envelopes to invest in high value housing which may be left empty or under-used to avoid paying tax.

The Government has actively encouraged the property industry to ensure that homes for sale are marketed in the United Kingdom, and not solely overseas. In response, the Home Builders Federation announced in December 2013 a new industry initiative which commits signatories to ensure that housing developments in London are marketed in the UK either at the same time as, or in advance of, any overseas launch. The Mayor of London has also recently launched a Mayoral Concordat on new homes in the capital, writing to key developers across the UK, asking them to sign up to commit to selling new homes on every development to Londoners before, or at the same time as they are available to overseas buyers. The Concordat is already supported by the Major Developer Group, London First, the London Chamber of Commerce and the Home Builders Federation and signed by fifty developers in London.

The Government’s pragmatic approach is helping deliver more housing for UK residents and support jobs and long-term economic growth; by contrast, illiberal protectionism and state regulation would mean the reverse.

It is already possible to use the Help to Buy: equity loan scheme to purchase ‘off-plan' properties and this is a very common way for anyone to buy new build property. Developers sell the homes they build to a broad range of purchasers and the Government does not seek to intervene in these commercial decisions. However, we would encourage the industry to ensure that off-plan properties are marketed domestically and not just to overseas buyers.

Since 1 April 2012 strategic oversight of housing in London, along with housing and regeneration budgets, has been fully devolved to the Mayor of London. The Greater London Authority applies no specific residency restrictions on shared ownership schemes. Eligibility for shared ownership within London is dependant on household income being below the £66,000 a year threshold for one or two bedroom homes, increasing to £80,000 for three or four bedroom homes. Purchasers must be unable to purchase a property suitable to meet their needs on the open market.

This Government is committed to supporting people’s aspirations to own their own home, regardless of where they live.

We have significantly widened the eligibility criteria for the Help to Buy equity loan scheme to ensure as many people as possible are able to benefit. There is no income limit and the maximum home value has been set at £600,000, thus encompassing over 90 per cent of the new build housing market in England.

The Help to Buy: equity loan scheme is fully available in London and in the first seven months alone it has already helped over 1,200 hard working Londoners reserve a newly built property.