Letter: Reference to Savills Data Is Misleading

Published on: 14 Jul, 2014
Updated on: 15 Jul, 2014

From John Rigg

One cannot agree with Pete Knight’s comments for reasons to numerous to list here but some of the information Susan Parker quotes [in her letter: Green Belt Development Is Not The Answer] could also easily mislead.

To quote Savills latest report: “Only 7% of Greater London properties for sale were bought by purchasers from overseas in 2013-2014 most of whom will let so the majority of this stock will be occupied by Londoners”.

Mrs Parker’s quote relates to a tiny area classified by Savills as Prime Central London (PCL) and being only 8% of the market. Figures for PCL are simply not applicable to the market overall. Even then this is purchasers of foreign origin who are working in London and hence are Londoners.”

Furthermore 88% of buyers in PCL are buying their main residences.

Savills’ head of research says: “To caricature all overseas purchasers as absentee ‘buy-to-leave’ landlords
is laughably wrong. London’s housing problems need solutions based on real evidence, not notions that are at best misguided.”

While Yolande Barnes of Savills Research was referring to a London debate her advice may also offer wise counsel to us here in Guildford.

John Rigg is a director of Savills and the chairman of the Guildford Vision Group (GVG)

Responses to Letter: Reference to Savills Data Is Misleading

Susan Parker Reply

July 14, 2014 at 9:01 pm

As John Rigg is a director of Savills he presumably know what the Savills’ data relates to, and I will defer to your judgement on that particular statistic.

But perhaps Savills should be more careful with their numbers, since Bloomberg (a highly respected financial information institution) quote Savills saying that 85% are not buying their main residences in prime Central London – which is the opposite of the comment above.

But it is not just Savills that notes that a huge number of the investors that are buying in London are overseas investors, and so Mr Rigg’s special knowledge isn’t all that applies here. I don’t think the notions are, in fact, misguided.

The BBC is impartial. It doesn’t have any clients to or for whom they are trying to sell property, or who may take their business elsewhere. The BBC does have the view that most current property sales in London, involving new build properties, involve overseas buyers, as shown in the programme I’ve listed.

The International Property Times notes that foreign property investors are immune to the capital gains tax that will be brought in from April 2015 (currently – if left empty – those homes get property gains tax free).

The Smith Institute published a report discussing the problem of overseas investors in London.

Boris Johnson has been commenting on the problems of overseas absentee investors, and how to tax them in order to create disincentives/free up empty properties so they can be used for rent or sale. Some of what I was quoting, including the 85 per cent statistic, comes from Boris Johnson’s Head of Planning, recently retired, who has been very public about the seriousness of this problem.

Islington Council is imposing taxes on developers if there are empty homes, because they think this is a massive concern.

So this is a real problem, not just my misunderstanding. Or, if it is a misunderstanding, it is shared by Boris Johnson and Boris Johnson’s recently retired Head of Planning and Islington Council and Ed Milliband and the BBC and the property press and the international financial press. And even George Osborne – who imposed Capital Gains Tax on non-resident absentee landlords in April 2013 with effect from April 2015 (it is not quite clear why we needed the time lag).

Solving it could solve our housing crisis at a stroke – although builders would not be happy. If we imposed a law, as Australia has done, saying that overseas investors must make empty properties available for rent, then that would make the rental market cheaper. If we stopped non-resident buyers from buying at all, as Switzerland does, then it would mean that only people who live here would buy property.

If, like Hong Kong, we imposed a 23 per cent tax on non-resident absentee buyers, our exchequer would benefit. London, as a global city, is No 1 for overseas property investors buying here and the capital gains are currently tax free if you don’t live here.

All who work in the property sector benefit from the current bubble. But for our society as a whole, the results are disastrous. Houses are built, and bought, and left empty. I am not the only one noting it and it pushes up the prices of the other homes to everyone’s disadvantage. Only those who build houses, or who sell them, gain benefit from this process.

Meanwhile the rest of us may take a view about a government that seeks to sell off our country to the highest bidder.