Foreign ownership

Meeting: 
MQT on 2013-11-20
Session date: 
November 20, 2013
Reference: 
2013/4099
Question By: 
Tom Copley
Organisation: 
Labour Group
Asked Of: 
The Mayor

Question

Do you believe that Capital Gains Tax should be applied to overseas investors in housing? What impact would such a measure have on your plans for housing in the capital.

Answer

Answer for Foreign ownership

Answer for Foreign ownership

Answered By: 
The Mayor

Tom, yes.  I congratulate you, by the way, on your sterling defence of Conservative housing policy. 

 

Seriously, the point that you make about foreign ownership is a good one.  Actually, I see no reason why there should not be a level playing field for foreign owners.  The question is how much the Capital Gains Tax will actually raise.  I have seen figures of £10 million or £100 million.  It is not going to be a huge figure, but it is probably on balance the right thing to do.

 

Tom Copley (AM):  Thank you for that answer, Mr Mayor, and I am sure you will be as appalled as I am that your Government is presiding over the lowest level of house-building in this country in peacetime since the 1920s.  I just thought I would raise that.  Can I ask you, though?  You have been pretty consistent in opposing any kind of action which would involve some sort of tax on overseas investment in housing.  In fact, as an avid lover of fiction, I always read your Telegraph column and you have used that, indeed, to oppose any kind of action.  Why are you now contradicting yourself?

 

Boris Johnson (Mayor of London):  No, I have not.  I think you will find I campaigned for the stamp duty thing.  I thought it was outrageous that foreign owners were not paying stamp duty.  You need to read my articles more closely, Tom.

 

Tom Copley (AM):  I read your articles very closely.

 

Boris Johnson (Mayor of London):  I think it is disgraceful: ignoratio elenchi.  Indeed, the stamp duty change has been incredibly beneficial from a revenue point of view.  The money has been pouring into the Treasury after that change came in.  I think it was the right thing to do and what it shows is the robustness of the London housing market and the strong demand for London houses.

 

Tom Copley (AM):  I am pleased you agree and that you welcome the idea of imposing Capital Gains Tax.  The London Assembly, as you will be aware, has passed two motions now, I think, calling on you to investigate the whole issue of the effect of overseas investment in housing on the London property market and yet you have refused to do so.  Why is that?

 

Boris Johnson (Mayor of London):  Forgive me.  I have not seen your motions, but we are endlessly looking at what happens ‑‑

 

Tom Copley (AM):  Either of them?

 

Boris Johnson (Mayor of London):  ‑‑ with the property market.  We are looking at the impact of overseas investment and it is a relevant consideration that without overseas investment in London property, we would not be able to get away with big schemes like Battersea, which is going to deliver thousands of homes.  These investments are generally very, very helpful.

 

Tom Copley (AM):  You make these assertions and these are developers ‑‑

 

Boris Johnson (Mayor of London):  There is one thing I do oppose.  I will just give you an answer.  I think you may be interested.  I am of the view that homes for sale in London should be marketed first to people in this country and not marketed as a priority off‑plan to people in other countries.  I believe they should be marketed first to people in this country and indeed first to Londoners.

 

Tom Copley (AM):  I hope this is something that you are saying to developers, but I want to come back to this point.  We have made what I think is quite a reasonable request, which is that you investigate the impact on this, because there is no serious detailed research.

 

Boris Johnson (Mayor of London):  We have obviously ‑‑

 

Tom Copley (AM):  You have Gerard Lyons ‑‑

 

Boris Johnson (Mayor of London):  I will give you the figures.

 

Tom Copley (AM):  ‑‑ your Economics Adviser.  The effect of this is it is pushing up house prices in the city.  We can be pretty sure of that.  Why will you not commit some resources to investigating it so we can actually get a clear idea of what the effect is?

 

Boris Johnson (Mayor of London):  I will give you some of the figures.  It is certainly true that in the hot spot areas in central London you are seeing a lot of the market is being taken by international investors, but across the city as a whole the figures are currently at about 6.5%.  That, by the way, includes many buyers from, say, Ireland who figure in that category.  That is roughly the rate it has been since 1990.  It is no higher than it was in 1990.  The real question that you raise is to what extent the London market is being driven by the attractiveness of London to international investors and to what extent that is pushing up prices beyond the reach of Londoners.  That is unquestionably a factor.

 

It is our belief, though, that it is not by any means the only factor and not the most important factor.  The most important factor in determining London house prices is demand and supply.  That takes us back to a conversation we have countless times, which is that we have had a chronic failure in this city - and indeed in the country - to supply enough homes and as long as there are not enough homes, you will see prices rising.  There is very, very strong demand not just from international investors but from indigenous Londoners and that is the overwhelming reason why prices are so high.

 

Tom Copley (AM):  I am going to leave it there, Mr Mayor.

 

Boris Johnson (Mayor of London):  The only way to solve that is to build more homes