Sadiq
Khan condemns foreign investors' use of London homes as 'gold bricks'
Mayor
condemns capital’s housing policy for being ‘obsessed by numbers
rather than building the right sorts of homes’
Robert Booth
Wednesday 25 May
2016 17.10 BST
The mayor of London,
Sadiq Khan, has attacked foreign investors for using homes in the
capital as “gold bricks for investment” following a Guardian
investigation that revealed the UK’s tallest residential skyscraper
is now more than 60% foreign-owned and is under-occupied.
Facing questions
from the London Assembly for the first time since he was elected
mayor, Khan warned that building thousands of new homes a year in
London to solve the housing crisis would mean nothing if “they are
all bought by investors in the Middle East and Asia for use as second
homes or they sit empty”.
He said: “The
Guardian’s front page today is an example of the consequences of
the last eight years of being obsessed by numbers rather than
[building] the right sorts of homes.”
The investigation
revealed that homes in The Tower, a 50-storey skyscraper at St George
Wharf in Vauxhall, which opened in 2013, had been sold to more than
130 foreign buyers including a Russian billionaire, the former
chairman of a defunct Nigerian bank and a Kyrgyz vodka tycoon. None
of the 214 flats in the tower are classed as affordable, although it
was built as part of a wider development that included 30% low-cost
comes.
The shadow housing
minister, John Healey, said the building had become “a symbol of
the housing crisis” in which new homes are sold abroad as
investments and left largely empty while fewer and fewer young people
can afford to buy or rent in the city. He said that it “fuels
people’s anger and sense of injustice”.
Khan announced he
wants to try to persuade foreign investors to instead put their money
into helping build affordable homes through a new agency, Homes for
Londoners, which plans to build new municipal housing with backing
from public and private money.
“Nobody is against
people investing in London trying to get a good rate of return,” he
said. “The issue is using our homes as gold bricks for investment.
People may want to invest in the wholesale side of building homes.
That is in stark contrast in buying homes off-plan as an investment
which are left empty.”
He revealed that
just 13% of the homes given planning consent in London last year were
affordable and attacked Boris Johnson’s record, warning: “This
appalling legacy will be a millstone around the necks of hard-pressed
Londoners for years to come.”
Planning consent for
the Tower, where flats have sold from £560,000 at the bottom end to
£51m for the five-storey penthouse, was originally granted by John
Prescott when he was Labour’s deputy prime minister in 2005. His
decision went against the wishes of the local council and the
planning inspector, and was attacked as “an appalling mistake” by
the former Tory cabinet minister Lord Baker, who predicted in 2005:
“In that great tower, there will be no social affordable housing.
It is all for the alphas. It is all for the toffs.”
Sadiq Khan at his
first mayor’s questions on Wednesday. Photograph: Dan Kitwood/Getty
Images
Responding to the
revelations that so much of the tower had been sold off and was
underused, Prescott told the Guardian it was “deplorable”.
“I was hoping that
we were providing housing for housing,” he said. “We didn’t
envisage that it would be given over to people investing in London. I
had no power to stop it on the grounds of who was going to occupy
it.”
Conservative MP Bob
Blackman, who sits on the Commons communities select committee, which
scrutinises housing policy, said the fact that the five-storey Tower
penthouse was owned by an oligarch who had not yet lived there was
ridiculous.
Blackman said it
might now be time to consider a policy demanding buyers of UK
properties commit to living in the UK for more than 90 days a year.
Ken Livingstone, who
also backed the scheme when he was mayor of London, said he had no
idea so many foreign buyers would be seeking to deposit money in
London property.
He described the
international buy-up as appalling. “I was very keen to get foreign
investment into London, but that was in terms of constructing
developments and creating new jobs, not flogging them off to people
who just keep them there in case there is a coup and they have to
flee,” he said.
“If I was mayor
now, I would put compulsory purchase orders on empty homes. Either
you live in it or sell it. The more empty properties there are, the
more it hypes up the overall house price level.”
But representatives
of the property industry defended the scheme and insisted there was a
vital need for international investment.
“Upfront foreign
investment is key to bringing forward a lot of these developments,”
said Steve Turner, spokesman for the Home Builders Federation. “Their
investment ultimately leads to an increase in overall housing supply,
including affordable homes. There is affordable housing in this
development, but it is just in this particular tower that there
isn’t. The foreign funding for this tower will directly lead to the
developer’s ability to provide affordable housing.”
A spokesman for the
developer, St George, said it was wrong to focus only on the makeup
of the Tower’s ownership. “St George has a wide range of homes
under construction in London, in nine developments providing 9,300
homes, with 2,403 of these being affordable to buy or rent,” he
said.
“The whole of the
St George Wharf site was developed at considerable risk and after it
lay empty for decades. St George committed to construction of the
Tower in the recession, after the banking crash, when other sites
across London were being mothballed. The Tower was an important
signpost to the development of Nine Elms from Vauxhall, with the
wider Nine Elms development due to create 25,000 permanent jobs over
the next 10 years.”
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