Sales of newly-built London homes priced at up to £350,000 will be restricted to Londoners and people working in the capital for a one month period under an agreement between Sadiq Khan and leading house builders to be finalised later this year.
Members of the Home Builders Federation (HBF) and the G15 housing association group, including Berkeley Homes, Lendlease, Clarion and Peabody, have offered to sign up to the voluntary deal, which would be broadened to the whole of the UK only for a further two months after the first one.
City Hall says the arrangement is a “landmark step” towards offering exclusive “first dibs” on lower cost new dwellings in the capital, which would have taken much longer to achieve than through more formal measures introduced by way of the planning system.
It will mean that no sales of or marketing to potential buyers outside of the UK takes places before the marketing of the properties begins, which can often be before they are completed.
City Hall is emphasising that the Mayor’s “first dibs” voluntary approach goes beyond that of his predecessor Boris Johnson, which covered only marketing, not sales, and said only that this should begin before or at the same time as to possible overseas buyers, without setting any exact timescale.
The £350,000 upper limit on the price of the new homes covered by the deal limits its effects to the lower end of the private housing sales range, though the figure broadly corresponds to that of properties within the price scope of some households eligible for “affordable” housing of the low cost home ownership variety, defined as having incomes up to a maximum of £90,000 a year.
The £350,000 figure also relates to the findings of a report for Mayor Khan into the impacts of overseas buyers – including UK citizens based abroad – on the capital’s housing market compiled by experts at the London School of Economics, published last June.
This challenged the widespread belief that large numbers of expensive flats bought by wealthy foreigners are left empty and reported that “pre-sales to overseas buyers enable developers to build faster and thus make more market and affordable housing available than would otherwise have been the case”.
However, it also found that half of the new dwellings purchased from overseas were priced below £500,000, a figure within the range of some would-be first time buyers. The “first dibs” deal is therefore an attempt to ringfence some of cheaper new properties coming on stream within that bracket for purchase by people who already live in London or work here and would like to live here too.
Mayor Khan’s 2016 election manifesto pledged to give preferential treatment for Londoners in relation to new homes to be built on “brownfield public land and using the Mayor’s planning powers to their fullest extent”.
Housing association homes coming under the “first dibs” deal now announced could fall into that definition because, although it is to be voluntary, housing associations are the principal beneficiaries of the Mayor’s affordable homes programme, which helps to fund the supply of affordable housing in the capital.
City Hall says it expects further house builders to opt in to the scheme in addition to the 26 already announced. However, Liberal Democrat London Assembly member Caroline Pidgeon has described the scheme’s take up as “low” and argues that it will mean “little in practice if an insufficient number of homes are actually being built in the first place”.
Figures recently published by think tank Centre for London put the average cost of a London home at £587,640, which represents a fall in the average price in the past year, although prices in many Outer London areas have risen. The threshold figure of £350,000 for the Mayor’s first dibs agreement means that most of homes it will relate to are likely to be in the cheaper Outer London areas.
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