A top British property boss today defended thousands of foreign buyers that have come under fire for scooping up scores of London real estate.
Berkeley Group Chairman Tony Pidgley dismissed growing criticism that wealthy foreign buyers and investors were driving up prices in the capital and making London unaffordable for ordinary Brits.
“If we don’t have [foreign buyers]on these bigger schemes there wouldn’t be as much funding,” Pidgley told LondonlovesBusiness.com. “They pay 20% deposit, which is large. This generates the cash flow and gives us the confidence to move forward with a scheme.
“At the end of the day this means that we build more and better private houses and can build more affordable homes.”
Under government regulations, all new residential developments must set aside a proportion of their new scheme for affordable or public housing, or pay out an agreed sum to the council. This is expected to be around 25% although government and developers can agree on a lower sum and several high-profile cases have seen a significantly smaller proportion paid out.
Pidgley, however, insists that the system is working and that foreign investment is critical for the UK economy as a whole.
“Basically most sites that Berkeley builds are third affordable – made up of shared equity or the public sector commitment – then a third goes abroad, give or take, which ends up being 50% of what is going in because a third is going to the public sector,” says Pidgley. “Then a third goes to the UK market.
“The percentage that [wealthy foreign buyers]make up is very small.”
Prices in some London borough are up more than 20% year-on-year with average prices across the capital witnessing a 6% rise. This has been good news for homeowners but bad has been damaging for the capital’s growing fleet or renters, as well as anyone trying to get their foot on the property ladder.
The growing frustration at the housing shortage has caused a growing chorus voices to rise up in opposition to the influx of foreign buyers, largely thought to be escaping political and economic turbulence in other parts of the world and looking to score a safe investment at a time of stock market volatility and historically low interest rates.
Earlier this week LibDem London MP Simon Hughes lashed out at the system for “failing Londoners”.
He said: “I resent the fact that when we have such a housing crisis in London, and so much unmet demand, that so many of our homes are being marketed abroad and sold abroad before Londoners have a chance.”
But Pidgley, whose Berkeley Group is an umbrella for various developers like St. James and St. George, has dismissed such calls as unrealistic.
“Politicians – and [Simon] Hughes is one of the main ones making these noises and has always been one of the main ones for battling and battling this – are not looking at the consensus around the issue. We are working in partnership with the councils,” says Pidgley.
The row comes after a 3,000 Berkeley Group unfinished apartment complex in Southwark went on sale in Asia. Berkeley Group paid out an agreed sum to Southwark Council on the back of the development to erect affordable homes.
Addressing audiences at the London Real Estate Forum, Pidgley said: “Without [foreign investors]London would be worse off and we would have fewer affordable homes and fewer private homes. I never understand why in our country we always have to attack markets that are doing well.”