If I may can I take you on a small tangential journey. London, forty years ago, was a souvenir city, rich in history and culture (similar to Paris today) and very little else. The centre of the commercial universe was New York.
After Margaret Thatcher freed-up exchange controls and liberated and de-regulated the byzantine dynamics of the city of London, the Capital over the last 30/40 years became metamorphosed into the financial colossus that it is today. More IPOs take place in London than anywhere else in the world and if you don’t have a presence here, you are not in the game.
As you would buy leather goods in Rome, haute couture in Paris, you buy a property in New York if you are there, but you buy one or two in London even if you don’t need one.
The capital’s robust property market has been good for investment, good for living and generally a wise choice to put money and we in London (and the UK) are the beneficiaries of this investment.
This rich foreign earnings source helps to assuage our balance of payments deficit, it attracts wealth creators to this country who buy goods here and by doing so, stimulates the economy.
At the moment we have one of the fastest growing economies in the world and it’s not by accident that this is driven by consumer demand.
Unemployment is dropping like a stone and inflation is under control – much to the chagrin of the Europeans whose economies are the on the floor with deflation as the main problem.
The fact that we have a dynamic property market is a great attraction and provides a source of wealth to London residents, quite apart from the international variety, the last thing that we should impose is any form of restriction on international buyers buying London property.
The Budget of 2012 and the 40% hike in non-corporate Stamp Duty (and 300% on corporate), has caused a considerable slowing down in the market above £2million to the extent that properties above £8million are ‘flat-lining’ (if not in recession) with supply up by 300% and turnover down by 75%.
The last thing that one needs at the moment is more regulation or restriction on the free-flow of transactions and it will send an entirely wrong message to the outside world that London is ‘closed for business’.
It may be irritating for the Asian market to snap up a good deal of the ‘new builds’ but it stimulates the housing market, provides work for the construction industry and this is why the London property market was the fastest market to return in the world after the recession of 2008.
We are all in danger of focusing on the demand side of the equation and not spending enough time on the supply side. If we de-politicise the planning process by changing the culture to a presumption for environment (rather than against at present) and help increase the funding for development projects we stand a better chance of building more new homes and therefore the numbers of foreign buyers for these will make far less difference.
London is the fulcrum of the world. Let the barriers keep back the tide and save London from the flood not from overseas investors who want to buy a piece of English heritage. Good luck to them.