Mayor Sadiq Khan has struck a voluntary deal with two dozen housing developers to only market and sell new homes built in the capital to UK residents for the first three months after they go on sale.
The deal applies to new homes costing £350,000 or less and has been backed by major developers such as Berkeley Homes, Redrow and Taylor Wimpey, as well as some Housing Associations.
It also grants Londoners an exclusive one-month window on new properties.
City Hall’s research shows that “half of new properties bought by overseas buyers in London were homes under £500,000” and the Mayor’s office says that capping today’s deal at £350,000 will help to boost the availability of “homes that are broadly affordable by households who would be eligible for affordable housing.”
According to the ONS, the average new build property in London costs £513,719.
Mayor Khan said: “I am determined we take meaningful steps to help Londoners buy more new homes they can afford, and the offer from across the housing industry will mean we can move quickly to make this a reality for our city.
“Through the extensive research I commissioned, I was alarmed to discover that overseas buyers were focusing to such an extent on the lower-cost end of new-build homes – many of which were being sold long before Londoners even knew they were available.
“That is why I have been discussing steps with the capital’s leading homebuilders and I welcome their landmark offer to give Londoners ‘first dibs’ for up to a month on all their new homes under £350,000, with sales ringfenced to UK buyers for three months before they are marketed overseas.”
The voluntary nature of today’s deal has echoes of a similar “concordat” agreed between former mayor Boris Johnson and 50 developers who agreed to market and sell new homes to Londoners “before, or at the same time as they are available to overseas buyers.”
London Assembly members repeatedly expressed concern at the lack of sanctions should any of the signatories break the terms of the agreement.
In June 2016, shortly after taking office, Mayor Khan criticised “the chronic failure” of Johnson’s scheme which he slammed as “toothless” because of the lack of any “effective sanction” should developers fail to live up to their undertakings.
The Mayor said he’d asked officers “to bring forward a range of meaningful options” to replace what he described as “Boris Johnson’s failed, frankly embarrassing attempt.”
However 18 months later, Mr Khan’s more “meaningful” scheme remains voluntary and his office confirmed that no sanctions are available to him should developers fail to honour its terms.
Sian Berry, a Green Party member of the London Assembly and long-time campaigner for housing reform, has criticised Mr Khan for failing to deliver on his own rhetoric.
She said: “We’ve waited a long time for the details from the Mayor and now all we see is another voluntary agreement with even fewer firms signed up.
“I’ve asked the Mayor before about his focus on overseas buyers when the real problem is people snapping up homes they don’t intend to live in, rather than where they come from.
“What our policies really need to address is people, wherever they live now, treating new London flats as investments and not using them as homes.
“It makes sense to focus on lower priced homes but what we really need are conditions on buyers for future residency, and it is possible to do this via the new London Plan.”
Liberal Democrat AM Caroline Pidgeon has also criticised the Mayor’s announcement, saying: “Two years into his mayoralty all Sadiq has come up with is yet another voluntary scheme with the housing industry.
“He might boast that the scheme is different to the past but he can’t hide from his scheme’s low take up.”
She added: “The ultimate issue is that first dibs on new homes means little in practice if an insufficient number of homes are actually being built in the first place.”
Andrew Boff AM, the Conservative’s City Hall housing spokeperson, said: “After two years of dithering, this is a pathetic offering from the Mayor which fails to meet his manifesto commitment to Londoners.
“This ‘new’ policy is simply a poor imitation of a previous scheme that the Mayor himself repeatedly criticised as ‘toothless’, yet with half the number of developers signed up.
“The Mayor promised Londoners ‘first dibs’ on new homes on brownfield public land and to back this up with planning policies.
“None of that is reflected here.
“‘Londoners’ do not have priority, there are no public landowners involved, and the London Plan does not require developers to follow this approach.
“Setting an upper limit of £350,000 could also discourage developers from offering homes at this level, pushing up house prices even further.”