Bermondsey and Old Southwark MP Simon Hughes has called on the Government to take steps to reduce the number of new London homes sold to overseas buyers.
Speaking in an adjournment debate in the House of Commons on Thursday, Mr Hughes cited the sale of homes on the footprint of the Heygate Estate at Elephant & Castle to investors in Malaysia and the marketing of the Southside development in Union Street to buyers in Thailand.
"I am very clear that the UK has prided itself always on its international connections. London is a great global city, and my wonderful constituency has been a destination and place of passage for people from all over the world for centuries," said Simon Hughes, Lib Dem MP for Bermondsey & Old Southwark.
"Nobody I know in public life, in my party or in my constituency, does not appreciate the contribution that foreign investment has made into our country in the past and will continue to make in the future.
"We have also historically prided ourselves on being a country based on the free market, from which UK citizens and residents can acquire interests abroad, and where non-UK citizens and residents, and companies registered outside the UK can acquire interest in property in this country."
He added: "The reality is that my country, my city and my constituency are desperately short of homes. In particular, we are desperately short of homes to rent, for shared ownership and to buy at prices that are affordable to the average income earner or average family."
Andy Slaughter, Labour MP for Hammersmith, intervened to ask: "Are not these properties being marketed abroad because of the type of property being built?
"High-value, high-rise properties are the ones being built and the fault lies with the planning authorities, the Mayor and some borough councils, such as my local one, which are giving permission for tens of thousands of the type of unit that appeals to Malaysian investors but is completely unaffordable to his constituents and mine?"
Mr Hughes signalled his agreement: "Many of the properties that are being built are specifically built with the probability that they will be sold easily in the foreign market.
"These are not family houses; these properties are mainly flats, often studio, one-bedroom or two-bedroom flats – small flats – which will either be buy to rent, will be used occasionally by somebody from abroad who might come here a couple of times a year on business or will be just kept as an investment.
"There is evidence that a lot of these places have nobody in them at all; they are simply bought as an investment in this country and will be sold later at a higher price."
The Bermondsey MP called on the Government to look at measures adopted by other countries to encourage the sale of new homes to local buyers. He said: "Singapore and Denmark have taken action in recent years, and I understand that Australia, Canada, Thailand and some states of the USA have done so, too. Those are not socialist republics; they are countries with free-market economies that understand they have to do something to look after the people within their shores, to whom they have an obligation."
Replying to the debate, Conservative housing minister Mark Prisk said that governments of all parties had failed to ensure that enough new homes have been built.
"From my political background, and my professional background as a surveyor, I think that this country has probably built only half the homes we need year on year for perhaps a generation," he said.
"As the right honourable gentleman rightly said, that has caused a long-term housing shortage and, with it, significant social problems, and that is especially true in Greater London.
"That is why the coalition Government are determined to take a different approach. Our housing strategy seeks to be comprehensive and to address both supply and demand and both freehold and leasehold, and it seeks to start to reverse the loss of 421,000 affordable homes that, sadly, we saw under the previous administration."
The minister cited a City Hall report which claims that in prime London developments —up to 75 per cent of buyers are from overseas, and across London as a whole approximately a third of buyers are foreign – and that it is these foreign buyers who effectively provide the backing to allow developments to proceed.
Mr Prisk also quoted Tony Pidgeley of Berkeley Homes – currently building luxury homes at One Tower Bridge which have been marketed around the world – who estimates that around the country, of the homes built by his firm, one third are affordable, one third is sold abroad and one third is sold to the UK market.
The minister continued: "I say to the right honourable gentleman that I totally understand the sense of frustration and challenge that local authorities and, indeed, local people may feel about this issue, but if we seek to curtail inward investment in a crude or ill-defined way I think we can both agree that it would lead to a significant set of unintended consequences."
He concluded: "I think there are perfectly understandable concerns about the potential impact of people from overseas buying homes in London. We should not, however, pretend that there are no benefits – I know that the right honourable gentleman does not seek to do that.
"Inward investment has helped more homes to be built and it encourages confidence.
"We need a balance to be struck, but overall London benefits from being an open and diverse city, which both welcomes and, indeed, attracts investment from around the globe.
"I look forward to continuing this dialogue and to making sure that we continue to keep on top of what is a difficult and vexed issue that we hope to challenge."